Now, I'm ABSOLUTELY not a fan of SCO's. But the basic IDEA expressed here is not such a strange one. Essentially, a company has two choices:
Try to make money off that which you own and which is already developed, or
Try to develop new profitable products/technology.
Option 2 is expensive and risky by comparison. Sure, you want to develop new products, but if you are not milking what you can out of the existing ones, then there is no point in developing new ones! Management is being (criminally) negligent if it doesn't pursue option 1. LOTS of companies make money this way by licensing technology. If SCO does have a basis (or management believes it has a basis) for these claims, then management has an obligation to pursue this course.
The really interesting points here, however, are:
That they are explicitly stating they believe SCO is incapable of surviving by option 2!
Many non-technical people don't understand what a crock SCO's case appears to be. While the investors may just be cynical/evil, it seems quite possible that the they BELIEVE that SCO's IP is legitimately being violated. (Perhaps, after the lawsuits fail, the investors may sue members of management for misrepresentation?)
Although that wasn't your original stated point...:
1) Money in the bank != profit. One is an asset, the other is related to income.
2) Given that there is very little marginal cost in collecting this income (there's no R&D/production involved, and likely little legal cost, given how smaller companies often cave in the face of Microsoft's legal might), every four such license fees means as much as a cent in EPS. While this is not enormous, it's simply not insignificant either.
3) Share price is of paramount importance to management and shareholders. News like this often increases share price by a greater factor than the actual marginal profit would dictate. Just look at Nortel's 'major announcements' over the last 6 months to see this in action.
Are your electricity costs REALLY that high? The Ontario government capped ours at 4.3 cents/kilowatt hour. This works out to about $75 (CANADIAN) per year (assuming that 200W are drawn continuously, which, as another poster pointed out, is unrealistic).
I don't know about British law (although our Canadian system is probably closer to it, than to the American system we see on TV), but doesn't there need to be a REASONABLE doubt?
I guess part of the question depends on how you define the 'tech industry'. If you define tech as the role that computers/networks currently play, then yes, that is a very real possibility-- the products, and the skills to produce them, will be commoditized and moved offshore.
But this loses sight of the fact that 'technology' ISN'T the set of products with power cords and blinking lights currently being churned out by the 'tech industry'. Rather, 'technology' is innovation, and the competitive advantages and products that are generated by it.
Virtually EVERY product or technology will become a commodity over time, and can be produced generically, by almost anyone. But INNOVATION can't be simply 'moved offshore'. It can happen anywhere, and it just so happens that North America has been particularly good at fostering it.
Despite the current situation, I don't think anyone could realistically predict a long-term deterioration in the tech industry. Regardless of the whether your Nortel stock is doing well or not, technology is just too important to today's economy, underlying business activity in nearly every sector. If it can drive down cost, or provide a competitive advantage, it will be valuable longterm. I'm sure that I'm preaching to the choir here, but technology isn't going away...
Further, as worker productivity increases in the longer term, while natural resources become scarce, it seems clear that an increasing proportion of our output will have to consist of services and 'intangible' (e.g., information) products.
Either that, or we'll all be unemployed and starving...
Having worked in the marketing department of a company that traditionally exhibited at Comdex, I'd absolutely agree that the writing has been on the wall for a long time. But I would note that it started long before the ecomonic downturn.
The decline in exhibitor interest was precipitated by a deterioration in the quality of attendees. We used to see a lot of real prospective B2B customers, people who were knowledgeable. Over time, COMDEX seemed to reduce the 'admission requirements' to increase revenue; over time, these customers were mostly replaced by consumer tire-kickers and people looking to drop off resumes.
I'm not knocking comsumers (or job seekers!), but the reality is that most of the exhibitors didn't survive on consumer sales...
Can't locate my copy right now, to give you the exact month, but there was a National Geographic article on the retracing of the route within the last 8 months.
I remember some interesting commentary on the desire of municipalities to claim ownership of historic sites.
NOT in a 'truly competitive market', but in a market with perfect competition, with commodity products. Printers are NOT a commodity product; brand preference plays an enormous part in this marketplace.
Having worked in the industry, I can tell you that HP's brand carries incredible buyer preference.
Did you know that CANON commercialized laser printer technology, and to this day manufactures the engine in every HP LaserJet sold? However, despite several attempts to launch their own line of standalone printers, they have never been successful. They've been locked out of the marketplace not by technology, but by insufficient brand presence.
Slashdot Mirror
Option 2 is expensive and risky by comparison. Sure, you want to develop new products, but if you are not milking what you can out of the existing ones, then there is no point in developing new ones! Management is being (criminally) negligent if it doesn't pursue option 1. LOTS of companies make money this way by licensing technology. If SCO does have a basis (or management believes it has a basis) for these claims, then management has an obligation to pursue this course.
The really interesting points here, however, are:
Hey, I'd still like to hear yours...
I really had the hots for her in Breakfast Club and Sixteen Candles...
Although that wasn't your original stated point...:
1) Money in the bank != profit. One is an asset, the other is related to income.
2) Given that there is very little marginal cost in collecting this income (there's no R&D/production involved, and likely little legal cost, given how smaller companies often cave in the face of Microsoft's legal might), every four such license fees means as much as a cent in EPS. While this is not enormous, it's simply not insignificant either.
3) Share price is of paramount importance to management and shareholders. News like this often increases share price by a greater factor than the actual marginal profit would dictate. Just look at Nortel's 'major announcements' over the last 6 months to see this in action.
Are you familiar with capitalism? Shareholders? There is no such thing as 'enough money' for a corporation.
That was Bill Shaw... (Or I hit the submit button by mistake.)
GBS was referring to 'blasphemies'.
All great truths begin as blashpemies.
In my previous life in marketing, I was an exhibitor in many Comdex shows. We stopped attending because so many of the 'customers' were job seekers...
Grand Theft Auto cured me of my phobia of going to prison for running over pedestrians...
I think the study was done on the staff of an NBA frachise.
(That's basketball.)
"Sir, what exactly does 'having your salad tossed' mean?"
Are your electricity costs REALLY that high? The Ontario government capped ours at 4.3 cents/kilowatt hour. This works out to about $75 (CANADIAN) per year (assuming that 200W are drawn continuously, which, as another poster pointed out, is unrealistic).
I don't know about British law (although our Canadian system is probably closer to it, than to the American system we see on TV), but doesn't there need to be a REASONABLE doubt?
I guess part of the question depends on how you define the 'tech industry'. If you define tech as the role that computers/networks currently play, then yes, that is a very real possibility-- the products, and the skills to produce them, will be commoditized and moved offshore.
But this loses sight of the fact that 'technology' ISN'T the set of products with power cords and blinking lights currently being churned out by the 'tech industry'. Rather, 'technology' is innovation, and the competitive advantages and products that are generated by it.
Virtually EVERY product or technology will become a commodity over time, and can be produced generically, by almost anyone. But INNOVATION can't be simply 'moved offshore'. It can happen anywhere, and it just so happens that North America has been particularly good at fostering it.
Despite the current situation, I don't think anyone could realistically predict a long-term deterioration in the tech industry. Regardless of the whether your Nortel stock is doing well or not, technology is just too important to today's economy, underlying business activity in nearly every sector. If it can drive down cost, or provide a competitive advantage, it will be valuable longterm. I'm sure that I'm preaching to the choir here, but technology isn't going away...
Further, as worker productivity increases in the longer term, while natural resources become scarce, it seems clear that an increasing proportion of our output will have to consist of services and 'intangible' (e.g., information) products.
Either that, or we'll all be unemployed and starving...
My DVD player, a couple-of-year-old Pioneer DV-525, plays VCDs (which I can burn on my CD burner). Won't play SVCD though, as far as I know.
Having worked in the marketing department of a company that traditionally exhibited at Comdex, I'd absolutely agree that the writing has been on the wall for a long time. But I would note that it started long before the ecomonic downturn.
The decline in exhibitor interest was precipitated by a deterioration in the quality of attendees. We used to see a lot of real prospective B2B customers, people who were knowledgeable. Over time, COMDEX seemed to reduce the 'admission requirements' to increase revenue; over time, these customers were mostly replaced by consumer tire-kickers and people looking to drop off resumes.
I'm not knocking comsumers (or job seekers!), but the reality is that most of the exhibitors didn't survive on consumer sales...
Can't locate my copy right now, to give you the exact month, but there was a National Geographic article on the retracing of the route within the last 8 months.
I remember some interesting commentary on the desire of municipalities to claim ownership of historic sites.
When I was in first year, we picked up this game just before midterms... My entire floor lost about a month to it!
Now, they hit me with it again, at the most intense point in my year!... Oh, the carnage...
NOT in a 'truly competitive market', but in a market with perfect competition, with commodity products. Printers are NOT a commodity product; brand preference plays an enormous part in this marketplace. Having worked in the industry, I can tell you that HP's brand carries incredible buyer preference. Did you know that CANON commercialized laser printer technology, and to this day manufactures the engine in every HP LaserJet sold? However, despite several attempts to launch their own line of standalone printers, they have never been successful. They've been locked out of the marketplace not by technology, but by insufficient brand presence.