malay's comments

The history lesson on Amazon's business model is important, but the OP has it a bit wrong. The business model innovation was about inverting the cash flow and holding cash instead of inventory. Amazon actually pays suppliers much faster than traditional book retailers, making it better for the suppliers.

Traditional book retailers pay suppliers 90 days after the book enters inventory whereas Amazon averaged about 58 days. The problem for traditional retailers is they held books in inventory (i.e. the book went unsold) for an average of 167 days versus Amazon's 16 days. This resulted in retailers carrying the cost of the book for ~78 days while Amazon was able to hold the float for ~41 days.

The end result of that type of inversion is that Amazon can accept a much lower margin, earn the float on the cash and live off much faster inventory turns than a traditional retailer. This was much more brilliant than "disintermediation" - as another poster has correctly noted, Amazon was an aggregator/replacement, not a true disintermediator.

Apple and Tim Cook have made it clear that they have more cash than what is required to run the business. Apple is spending billions on data infrastructure, manufacturing, pre-purchasing components and expanding retail operations; despite all these investments, they still have more cash than what they need.

They will likely generate another $50B in cash this calendar year. Even if they want to maintain the $100B war chest, they could pay out ~$50/share/year. I think a share repurchase or dividend (whatever they think will return more value to the shareholders) is highly likely.

My comment should have said that absent insurers over that time period, prices would be higher than they are currently. The effect they have is on controlling the level of price increases, not on lowering price absolutely (which I doubt is possible if people wish to keep extending their lives).

I am not saying that insurers are the most effective option or advocating for them; I am only saying that without them, prices would be significantly higher.

If you need evidence, simply compare the total price of any health care service (i.e. total cash outlay by all parties) between a person who carries health insurance and a person who does not. Universally, the price of the service is higher for the uninsured as they lack negotiating power.

They are certainly lowering the prices, hence the constant back and forth (literally for 30 years straight) of local market consolidation between the buyers (health insurers) and the suppliers (hospitals/physicians). There are legal fights going on all over the country because of all the pricing issues; Pittsburgh is a great example of how the dominant insurer (Highmark) simply refused to pay the dominant provider's (UPMC) price increase. Highmark's solution? Vertical integration and just buy the other local health system.

In terms of MRIs, you have some odd effects with pricing, particularly when the MRI is seated inside of a massive tertiary care center instead of a standalone facility. If you look at the pricing discrepancies, it is almost always related to getting the MRI done at an academic medical center versus one of the ambulatory care centers. The problem is actually pretty simple: hospitals are terrible at cost accounting and totally game it. Instead of taking the leasing costs over the expected uses of the machine, adding in time for the technician and a bit of a real estate or facility charge, they allocate hospital costs (from all departments/overhead) to services based on their expectations on what they can charge. Michael Porter and his staff at HBS are looking at this right now.

Further complicating MRIs (I'm not sure if this is included in the study's cost estimate) is that radiologists essentially operate in a cartel fashion. They are rarely, if ever, employed by the hospital (like most doctors), but band together and set outrageous prices for reading images. Radiology, despite being non-patient facing and limited liability (they render opinions to other doctors, not patients), is one of the most lucrative medical trades. Eventually, traditional radiology should give way - either through disruption (overseas or computers) or by other doctors simply saying why the heck should a radiologist get money for reading an image I can read myself and will then have to intervene on anyways?

Startups have emerged in price/transparency space (e.g. Castlight Health) and will hopefully start to put pressure on hospitals/physicians to actually compete with one another and bring down costs. Since they have so much local market power, there is only so far an insurer can go without owning an entire market.

Last July I took a taxi in Chicago and the driver was using a Square card reader. I take a few taxis every week in various cities, always paying by credit card (so it can be expensed), and it was the first and only time I've seen a taxi driver using Square.

I asked him about it and he said it was personal and he had not seen any other drivers using one. It's non-sensical and as an earlier poster noted, also a bit of a political issue, since the existing terminals force the driver to pay 6% versus 2.75%, with no ad revenue sharing. I talk to the drivers here in Boston quite often, and they have no choice on the terminals they have in the cars. One would think that if drivers are forced to accept credit cards, they should at least have the option of choosing a vendor.

Do you think the fig leaf is there for regulators or the other Android hardware manufacturers? While I agree there is no legally binding firewall (simply self-imposed), it seems there are some concerns they are attempting to address publicly.

I find Google's comments disturbing because the idea of a firewall means they have no intention of integrating Motorola. This would essentially limit any synergy between the two companies and turns this into a huge patent acquisition that comes with a side of distraction. If I was an investor, I would hope your theory of this being a complete joke is accurate since it entirely changes the lens on the transaction.

Apple entered the phone market because the performance of the existing, fragmented system was so low that it essentially required a fully integrated solution (OS, phone hardware, cloud, application/media store) to repair it. The performance of "iPhone" was and continues to be significantly higher than the competition, leading to all of the industry's profits pooling to them.

The best angle of disruption now would be for higher performance individual solutions (i.e non-integrated components) to emerge that work together seamlessly (through defined standards).

From my perspective, it does not appear that non-Apple players have defined enough standards around each component such that consumers can easily move between various solutions (OS, hardware, cloud, app/media store) that could, on their own, be considered better than any of Apple's pieces.

Until that happens, I don't think we will see disruption. Trying to out-integrate Apple is probably not a wise competitive choice at this point. Apple continues to buy more of the value chain (e.g. Anobit), suggesting they believe more performance can be wrung out of an integrated system and help them maintain a significant competitive advantage across price, functionality, convenience and reliability.

200,000 years ago is the approximate consensus for the arrival of Homo sapien; however the commonly held belief is that behavioral modernity occurred approximately 50,000 years ago.

Most of that doesn't really end up mattering because the last 10,000 years (marked at the origin of agriculture, 8000 BCE in the BBC table) have contributed disproportionately to the 107B figure. An extra 150,000 years at a baseline 1M population wouldn't throw the figure off more than 10-15%.

I always find this statistic about the number of people who ever lived to be incredible. It means that 6.5% of everyone who ever lived is alive right now. For me, that fact helps explain the incredible pace of change observable in every facet of civilization. There is an awesome amount of our humanity's intelligence on display at this very moment.

Then, when you consider how a lot of the 6.5% live (i.e. with extreme poverty and hunger), we are not even remotely reaching our collective capacity. The pace is going to get even faster as we achieve the Millenium Development Goals.

This story of Intel and ARM is fascinating because it is likely to become one of the purest case studies of disruption theory. If ARM can successfully change the basis of competition in the server market to power consumption versus pure performance and disrupt Intel, it will be another powerful example.

On the other hand, if Intel can actually capture share in the low end market (mobile devices) by hitting the right power-performance mark, they will provide a great example of how an incumbent can successfully fend off a low market entrant. Andy Grove would be proud.

If Intel manages to win in this next phase of computing, it will hopefully start to give companies pause before they outsource what some consultant deemed to be "non core" (manufacturing, in this example). Christensen has pointed out how much damage this is doing to long term results [1].

[1] http://www.forbes.com/sites/stevedenning/2011/11/18/clayton-...

I thought the same after the first dip (was going to purchase at ~$150/share), but ended up convincing myself there was a stronger bear case to be made. Primarily, I considered:

1. Content producers control Netflix's ability to succeed; they could either support significant fragmentation across multiple service providers (allowing many entrants/competitors and driving up prices for their content) or distribute directly (eliminate middle men altogether)

2. Multiple competitors are or could potentially price much lower than Netflix streaming based on totally different business models; Amazon subsidizes streaming to drive sales in their core business and Google could do the same using an advertising-based model

3. Last point here is pretty subjective, but I didn't think Netflix was a likely takeover target by the majors (i.e. key competitors), especially given that Hulu is also on the block; Google already has platform, users and device-level distribution through YouTube and Amazon has much the same, in addition to already profiting from Netflix's growth (through AWS)

I had problems making a long-term case for NFLX and the blunders of leadership further eroded my confidence. I'm not sure the stock is truly worth about 1/3 of what it was a few months ago, but I'm still not buying it.