James Alley’s Blog

iPad and the Apple Server Farm

Mon, 1 Feb 2010 12:39:21 -0800

I predict that the iPad will not only take off: it will become the "main" computer for a lot of people.

I have used a laptop as my main computer for over 15 years, but during that time there were many people who saw a laptop as a peripheral to be used in conjunction with a desktop computer (or at least with a dock). Over time, however, users and IT organizations have come to see laptops as primary computers.

Similarly, a huge number of consumer-level users will find the iPad meets the vast majority of their computing needs, or even performs better than a laptop at certain common tasks like email, calendaring, and web browsing. I can see IT administrators wanting to give a lot of administrative staff, for instance, an iPad with a keyboard dock. It will be cheaper than a laptop.

However, the iPad demands a "mothership" computer just as an iPhone or iPod does. You need the mothership to sync, backup, authenticate, etc. But it seems crazy to have a desktop mothership sitting around just as a backup device. Home users will have a similar problem. Maybe my wife and kids would be happy to live off of an iPad 100% of the time...but we'll still need a desktop for them to sync/backup to, to store their media libraries and the like.

Meanwhile, reports of a $1b Apple server farm have been out there for a few months now. Many people have speculated they plan on going to a streaming iTunes model and that the farm is meant to support such a move. But I think they will use their new capacity to offer cloud-based backup and storage for iPad, so that people can make it their main computer without having to use a desktop or laptop as a home base for docking, sync, and backup. With cloud-based backstop in place, users can use their iPad with abandon, and if they lose it, they can brick it over the air, then buy a new one, re-sync with the cloud, and be back in business.

This system will be cheaper for IT to procure and administer, and subscriptions, apps, and media sales will augment Apple's bottom line with a regular income stream.

I really think this is where Apple will take this, and we'll see a lot more news about the iPad and MobileMe.

The biggest competitor will be Google with Chrome OS or Android OS running on similar devices.

Warren Buffet Duplicity

Thu, 2 Oct 2008 14:02:11 -0700

The man is an evil genius.

He is so affable, so humble, and so intelligent, he is disarming.

But the conclusions I drew after watching his interview with Charlie Rose are unmistakable.

He wants the bailout to go through-- indeed, I think he was making this appearance as a sort of appeal to the public to get it done-- but at the same time he admits to being personal friends with "Hank" Paulson. And he just invested billions into Goldman Sachs, Paulson's alma mater and a company sure to benefit from the bailout.

Also, I detected some disingenuousness. He claimed that the bailout would be an investment, not an expenditure, and one so good that he would love to join in. Ah, if only he had 700b to invest, but he doesn't have that much, he says.

He claimed that the government should buy these toxic securities at a low market value, and was sure to profit handsomely down the line.

But if the government is going to pay market value, why can't Buffett just step in and pay market value. You know, buy five or six billion of this stuff? Since it's such a good investment?

But he didn't. Instead, he bought into a company (Goldman Sachs) that stands to be relieved of these toxic assets.

What a two-step. Behind that affable exterior lurks a shark ready to swallow up the entire school of fish.

Think this will affect the price of housing in the Bay Area?

Thu, 20 Mar 2008 16:07:06 -0700

From MSNBC:

The entire states of California, Florida, Arizona, Michigan, Ohio and Nevada — which have seen the highest foreclosure rates and the worst price declines — are blackballed on some mortgage insurers’ lists.
Well, I guess that means we’re back to the traditional 20% down, 30-year mortgage. Phew! Thank goodness. As if being in debt for 30 years wasn’t bad enough, the interest-only or negative amortization loans of the past decade have left people in what is essentially indentured servitude. Maybe now people will be able to buy a home at a reasonable price and actually pay it off before they die.

Maybe now people will actually have to start saving again, in order to afford that down payment in the first place.

Maybe, since people will be saving, they’ll also consume less, and it will be better for the environment. Maybe reduce-reuse-recycle will actually mean something again.

Maybe people will learn the old-fashioned value of thrift, without us having to go through a depression and world war to figure it out.

Or maybe there will be a depression after all, years of negative cycles.

Or, maybe the fed will prop up Wall Street for awhile longer. Low interest rates will keep the markets buoyant. An ever-more-highly-leveraged Fannie and Freddie will slow the bleeding in housing. A federal guarantee of bad Bear-Stearns securities will forestall collapse.

That’s what’s happening. Where will it go? I think in the end it will result in high inflation, high interest rates (down the line), high oil prices, and overall stagnant economic growth. Weak profits in the markets. Stagflation, for sure.

We got here from certain sectors being over-leveraged. Now we’re fixing it by propping up bad debt and encouraging major institutions to extend their leverage even further? I worry that this will lead to a simply even bigger, wider collapse down the line. Maybe the Fed is simply trying to delay the inevitable so the members can get outta Dodge.

Well...hopefully I can scrape together a down payment for a house of my own someday.

Grin and Bear It

Mon, 17 Mar 2008 18:11:37 -0700

With the Bear-Stearns collapse, I’m finally starting to see the pundits and talking heads mention the word Depression. As in, Great Depression. How bad will this get? It seems likely we’re heading for the worst recession since the Depression– one that should take years to definitively climb out of. I predict two or three years of sustained gloom.

Consider this quote:

“What we're in here is the closest thing we've seen to a bank panic since the Depression,” said Senate Banking Committee Chairman Charles Schumer, D-N.Y.
I’ve been struck over the last few days how insiders have been using words like “collapse”, “panic”, “depression”, and “crash”. When you review the onset of the Great Depression, all the warning signs were there, and it was reported in the news in much the same laconic way as the current crop of worrisome reports.

I don’t think any of this changes my outlook or strategy though. I still plan on socking away for retirement as much as I can, when I can; and I still plan on waiting to buy a house, that is, waiting till housing prices enter a range that is honestly affordable for someone with my income.

Back to housing then. Lately, it’s just not made financial sense. Housing prices are still relatively high—very much so, in fact—compared to income levels. I think I would feel comfortable paying four times my income for a house. Frankly, twice my income sounds more like it, since we’re really in the market for a wee starter home, not a comfortable permanent abode. History backs up my assessment, and since the pendulum always swings back, I’ll hold tight.

Could mortgage defaults approach 20%?

Thu, 6 Mar 2008 14:00:27 -0800

Consider this fact, from MSNBC.com article “Mortgage Delinquincies Hit 23-year High”:

Late payments skyrocketed to a record high of 20.02 percent in the fourth quarter, up from 18.81 percent — the previous high — in the third quarter.
I wonder how many of those late payers will turn into foreclosures in the coming months. And we are just riding up the first wave of mortgage interest rate resets!

In a separate report, Americans' percentage of equity in their homes has fallen below 50 percent for the first time on record since 1945, the Federal Reserve said.
1945! Wow!

I predict it won’t be long before the numbers quoted by the media are referenced as being “the worst since the Great Depression” or even “equal to the Great Depression.”