December 19, 2003 blogging demographics has a page of statistics about their user base -- kind of interesting, not what I would have guessed.

Twice as many female bloggers as male -- not so surprising. But, 18 is the most common age for a blogger -- I had no idea it was so much more popular with younger folks.

Posted by dapkus at 09:48 AM | TrackBack

December 15, 2003

new home prices fall in the bay area

I ran across this article today in the SV Business Jounral: Bay Area new home prices fall
A sharp fall in new home prices in several Bay Area counties may be the long-awaited signal that the price appreciation boom in California homes may come to an end next year... The steepest drop was in Alameda County where median new home prices fell 25.9 percent to $453,250 in October 2003 compared to the same period a year ago, says Alexis McGee, president of Prices of new homes fell 15.5 percent in San Mateo County, 14.1 percent in San Francisco, and 11.2 percent in Santa Clara County year over year.
Posted by dapkus at 01:37 PM | TrackBack

December 10, 2003

legal vs crypto definition of non repudiation

Looking at my logs the other day, I noticed that my post on the problems with non-repudiation briefly snuck into googles top 20 results for non-repudiation -- very surprising. Perusing the other results I ran across this article on non-Repudiation in FirstMonday. They compare the common law definition of repudiation to the crypto definition:
The basis for a repudiation of a traditional signature may include: * The signature is a forgery; * The signature is not a forgery, but was obtained via: o Unconscionable conduct by a party to a transaction; o Fraud instigated by a third party; o Undue influence exerted by a third party. ... The general rule of evidence is that if a person denies a particular signature then it falls upon the relying party to prove that the signature is truly that of the person denying it. ...There is a clear contradictory position between the technical meaning and the legal meaning of the term "non-repudiation" where there is a clear case of forgery as regards to an alleged digital signature.
So, seems clear that crypto non-repudiation only really deals with the first case above (signature is a forgery), and that only poorly. [via Carl Ellisons Rant on Non-Repudiation]
Posted by dapkus at 12:54 PM | TrackBack

strategery in the software business

related to Microsoft envy, is the fixation by many strategists in the software business on emulating the tactics Microsoft used on its climb to the top. The biggest fixation is on creating lock in -- getting a customer committed to your product by packaging a feature in such a way that switching to a competitors product would entail paying some substantial cost, e.g. by exposing a unique/desirable feature via a proprietary API; by making it easy to get your data in but hard to get it out; etc. In principal, there's nothing wrong with this; it can generate sustainable competitive advantages. Where most companies seem to go wrong is in (1) underestimating the degree to which customers are sensitive to switching costs; (2) by going out of their way to increase the switching costs unnecessarily. This particularly true in areas where customers have a fair bit of experience buying, e.g. the enterprise software business, where buyers often have a decade or more of experience working with software vendors. In their pursuit of strategic sustainability, they blunt the competitive advantage of the feature. Which would you rather have: a feature with weak but sustainable competitive advantage? or a feature with strong but unsustainable competitive advantage? My personal opinion is that, in most cases, you'd rather have strong competitive advantage. You should focus on generating advantages and let the sustainability of the advantage sort itself out. All you get from sustainability is complacency.
Posted by dapkus at 12:01 PM | TrackBack

grid sweet spot?

Grid computing seems to be climbing the hype curve. I can't claim to be an expert on it, but I have to say it has the smell of improbablility.

Distributed computing architectures are in most cases more art than science. While some problems are easily decomposed into tiny pieces that can be solved in parallel, others are clearly not. Also, often the critical bottle necks are communication, not computation -- you spend your time finding the right ways to package up the problem and connect the pieces to avoid moving data around unnecessarily.

You can certainly develop algorithms for distributing the computation that adaptively address these problems; however, any time you ask a computer to do something that has a degree of "art" to it, you have to accept a certain amount of slop.

Grid computing's sweet spot seems to lie on an improbable location in the terrain -- a place where computers are too cheap to be managed directly by people but too expensive to be left idle. The improbability of this location is increased by the as-yet steady march of Moore's law and the inevitable friction you'd have to accept in the system.

When you add to this the challenges of trying to develop, debug, and manage such a grid, I think you are forced to conclude grid is likely to see more theory than practice.

I think the reason its so popular is that it is technically cool and it appeals to certain ideals widely held by engineers (e.g. efficient use of resources).

Posted by dapkus at 11:22 AM | TrackBack

December 09, 2003

fortune: your house may soon be worth less

Fortune has an article this month on The New Home Economics. You can't read the whole thing unless you're a subscriber (I'm not), but I thought this quote was pertinent:

"In housing, Americans typically are buying a monthly payment," says Mark Zandi, a housing specialist with "So if rates fall, bingo! They're willing to pay $500,000 for a house that two years ago sold for $400,000 because the carrying costs stayed the same."

So, reversing that, you'd expect rate hikes to lower housing prices. Given the recent talk from the Fed, it seems unlikely that rate hike is a danger to housing prices in the next few months; and even after rates start to rise, it's likely they'll do so gradually with the hopes of avoiding a nationwide bust. Seems like the greatest dangers to housing in the short term is that talk of a housing bubble refuses to die and metro area rents are on the decline.

This behavior of letting the payment set the price seems dangerous since, with low rates, it leads you to increase your debt without regard to your equity.

[via Business Pundit]

Posted by dapkus at 11:08 PM | TrackBack

metro rental markets at historic vacancy rates

Tom Brown's has an article about the decline in metropolitan area rents:

SINCE EISENHOWER WAS PRESIDENT: Here's the most compelling sign yet that the housing boom will cool any minute: the vacancy rate for rental units hit 9.9% nationally this past summer.That's the highest rate since the government started keeping records in 1956. Nearly half a century! Rents are now falling in 80% of the metropolitan areas in the country

Not surprising since our population isn't swelling -- all these new home buyers are folks exiting the rental market. This spells trouble for housing P/Es.

[via Jay Solo's Verbosity]

Posted by dapkus at 10:44 PM | TrackBack

December 08, 2003

are bay area housing prices sustainable

I've been doing a little poking around on the topic of bay area housing prices. I've had several people tell me that buying a house in the bay area is like buying a license to print money. Sounds suspicious to me, especially given the arguments they use when pressed for an explanation: most point to the past performance as the indicator -- not the best predictor.

So I was curious what you'd find if you looked at the underlying forces that drive housing prices. According to the Fed, housing prices and rents for equivalent properties are linked -- they roughly follow each other.

Nationwide, the low interest rates have been driving renters into the houseing market and this has generated a modest imbalance. The imbalance is small enough that a year or two of stagnant house prices and average rent increases will return the prices to equilibrium. This is why the Fed has been saying they don't anticipate a housing bubble.

This is not true for the bay area however: rents here have been declining sharply, as salaries decline, the area loses population, and people exit the rental market for the housing market. Economist Ed Leamer, head of UCLA's Anderson Forecast, looked at the home P/E ratio, the ratio of a house's price to the earnings potential of the house via rent. Using that measure, the Bay Area is 7% over it's record P/E from 1989. The same is not true for all areas. For example, LA has seen housing prices matched with rent increases and is currently 17% below its P/E ratio for '89.

I personally don't question that, long term, demand will outstrip housing supply in the area -- its the best place I've ever lived. But, it looks to me, in the short term, the Bay Area is due for a correction. The only question, in my opinion, is timing.

Posted by dapkus at 11:29 AM | TrackBack

why warren buffet is buying foreign currency now

Fortune magazine had an article by Warren Buffet about why he is buying foreign currencies for the first time in hist life.

In a nutshell:

... my reason for finally putting my money where my mouth has been so long is that our trade deficit has greatly worsened, to the point that our country's "net worth," so to speak, is now being transferred abroad at an alarming rate.

The article contains an extended analogy about two islands to illustrate the point. It also contains a proposal for how to deal with the trade imbalance.

I don't understand the way trade is measured well enough to agree or disagree with what he's saying. Regardless, always interesting to listen to what America's most successful investor is thinking about.

Posted by dapkus at 11:01 AM | TrackBack

December 05, 2003

microsoft envy

Always On interviewed Bill Gates this week. They talked about a number of things (linux, security, stock vs options). I thought this was the most interesting quote:

Gates: ... I think that jealousy has driven my competitors to more mistakes than any other factor I can name.

So true.

Coveting Microsoft's position on the desktop has a led to a host of bad decisions. They all scream bloody murder when they see Microsoft (ab)using its power, all the while they're running around trying to copy the strategies and tactics that got Microsoft where it is. And waste millions on futile attempts to take the desktop from Microsoft.

For example, you may recall that Java, when it was originally pitched, was all about applets -- the idea was that your desktop software would be delivered to you over the network, in a form that could run on any machine. This was Sun's attempt to take the desktop. How this would have benefitted them is completely unclear. They got lucky that the "write once, run anywhere" resonated with enterprise developers, who quickly co-opted the technolgy for servlets, so they could stop porting their software from platform to platform. The only way this currently benefits Sun, as far as I can tell, is that they get some license revenue via their certification and trademarking programs. It certainly doesn't seem to have benefited much from the generation of Enterprise software that can run as easily on Intel or HP as it does on Sun.

Apple pursued its attempts to compete with Microsoft much longer than they should have trying to regain the desktop they once held. They tried beat microsoft at it's game by producing a better operating system and application suite long after the market had tipped in Microsoft's favor. They even went as far as starting to commoditize their hardware (remember those Mac compatibles that were available for a year or two?).

From my point of view, this is the fundamental thing Steve Jobs did after his return -- convince Apple it didn't need to be Microsoft; it could be great without beating Microsoft. By doing so, he's been able to get Apple on to sound strategic footing (control the hardware to reduce the amount of hardware supported; move the OS to one better able to harness open source efforts) and steer it into niche markets where it was uniquely positioned to compete. Apple may never be as big as Microsoft, but it will continue to exist and may even thrive.

More than I will say for Sun, who's big annoucnement this week was the Java Desktop.

Posted by dapkus at 10:05 PM | TrackBack

December 02, 2003

demand draws supply

The NYT has an article, New Economy: Markets Shaped by Consumers, about how consumers shape markets in a more direct sense than is often appreciated. An unmet demand, if its strong and left long enough, will creates its own supply.

Eric von Hippel, a professor at the Sloan School of Management at the Massachusetts Institute of Technology, argues that a huge swath of innovation can be traced to elite consumers whom he calls lead users. These imaginative and technically adept consumers spot a need and invent a solution, often changing whole industries, from sports to software.

Mr. Von Hippel and his graduate students have compiled a series of case studies that fit his model of user innovation. Mountain biking, for example, began in the early 1970's when cyclists wanted to abandon paved roads for rough terrain. At the time, commercial bikes were not up to the task, so cyclists took heavy old bike frames with balloon tires and bolted on motorcycle-type lever-operated brakes for surer stops when careering down mountain trails. The industry spotted the trend, and mountain bike sales now account for more than half of the bike market in the United States.

"Needs emerge, and users scrounge around and find something," Mr. Von Hippel said, "or tools and technologies emerge, and people figure out how to use them."

The same was true of fiberglass surfboards, wet suits, and skateboard decks and wheels.

It was also true of digital music sharing in 97-98. I was consulting for the RIAA at the time -- they were worried people using CD burners to copy CDs; the internet seemed like distant concern. But there was this frenzy of activity around ripping digital audio off CDs (as trivial as this seems today, there are some technical challenges and the pioneers had to roll-their-own ripping software to do it) and compressing it (also an area where the pioneers had to write a lot of their own software). By 1999, there were neatly packaged tools, Napster had been born, and the music world had changed.

When a publishing association asked me when they had to worry about the same thing happening to them, I essentially told them to watch for the lead users -- people developing clever new ways to digitize printed media. So far, this advice will have served them well.

An interesting question is what would have happened had the lead users for digital music had their needs met before they'd had to resort to writing their own rippers, compressors, and players and developing their own distribution networks. Would all this innovation still have happened?

[via Many-to-Many]

Posted by dapkus at 10:16 PM | TrackBack

fedex study: entrepreneurship is the american dream

The Entrepreneurial Mind has a post summarizing the results of a study FedEx conducted. A surprisingly large percentage of Amercians dream of starting their own business -- 56% of all Americans (76% of African Americans). Add to that the 10% who already own their own businesses, and you end up with 2/3s of Americans. I had no idea.

Posted by dapkus at 09:12 PM | TrackBack