Money, money? Part 1

Back from running errands around the Valley. Just figured out how to get my son's very old iPod to work as a music player in my old Bimmer. Yep, it can be done. BMW wants $250 for the adapter cable, US electronics chains want $150, some guy in China? $12 with free shipping.
So, I have access to to my ancient music as I crawl along Highway 101 in The Valley. Good for me, death to most consume electronics... note I said 'most'.
Last song I heard was 'Money' by the good old Grateful Dead. Got me thinking as I pulled up home...How do you make it in Tech these days?
Software? Simple code is generated by cut and paste cowboys in India, VietNam, or rural China, for much less than US minimum wage. Difficult stuff out of eastern Europe mills or in big companies with big development systems and expensive help.  Not much profit in either. Unless the code can be used to unlock value from a secondary source.
Hardware? Even worse. Intricate designs and fabs costing in the 10s of billions of US dollars mean that only high volume, think LCD TVs or high value, think automobile fuel control, can be made profitably on their own. Anything else has to be tied to a product that enables a secondary money source.
Back in the Iron age, money was made by selling hardware. Software was the near-free giveaway.  Renting beaches in Hawaii for Apple corporate parties was evidence of the 60-80% gross margins of the day.  Nature abhors a vacuum, and Asian manufacturers abhor someone else making gross margin. So, the vacuum was filled quickly. Prices fell, quality fell, support went away, and volumes exploded.
IBM sold it out, Dell merged it out, but poor HP was stuck. HP was trying to sell it's PC business, with it's sub-5% GM and no prospect of improvement. No takers, couldn't even GIVE it away.
All of this is well known, of course. So, back to the Dead song, how do you get money?
Really only two ways now.

1. Sell data
2. Be Apple

(3) hope NVDA can pull another rabbit out of the hat

I will talk about the 'sell data' in Part 2 of 'Money, money?'.
Apple? They break ALL the current rules.
They mint money on hardware, while no one else make any gross margin.
They are almost completely vertically integrated when everyone else outsources all but the most critical functions.
And, with fashion brands and high end retailing under extreme pressure, Apple packs their stores and has people waiting in line for days when a new product availability is announced. Why did Apple succeed when other notable brands failed so miserably? Easy, they are not an Asian company,  and didn't try to be one. They controlled OS and software rather than cheap out and license it. 

Most importantly, they invested in service and support.  People with money WILL pay for service and support, but only if they get it at a level they expect.  Other US manufacturers treated service and support like the OS, outsourced it. The value of HP's brand was lost when a customer calls in for help and gets someone named 'Joe' reading a script deep in an Indian call center.  The value of the brand went to zero, as did the customers' willingness to pay up.  Hard to make 'Money, money' when customer are not will to pay you much.

Can Apple continue to mint money? Yes, until the value of quality and service goes to zero. As it has, for example, in the auto industry. Then, all you have is fashion. And, looking the turnover in teen clothing chains, that doesn't last.

Next for Apple? Bundling TV, books, music, news better. My local paper, the San Jose Mercury News is not even good for wrapping fish now. SF Chronicle is even worse. WSJ and NYT are too expense. And who wants to listen to FemLit Interns who run the Times OpEd section these days?

Health monitoring is the Holy Grail. If Apple, or someone else, can reliably monitor important body functions, they will clean up. It is coming, maybe Apple Watch X. Perhaps Google or (doubtfully) Samsung will first. The are all trying. 

On the Road...

Every generation seems to have a story about being on a road. Maybe it is literal, maybe philosophical, but usually it is both. 'On the Road', Easyrider, 'Zen and the Art of Motorcycle Maintenance', and many other titles. The road starts with the confusion straightaway, into a few questioning turns, over an anger bridge, past a few drunken hairpins, and too often ending up in a mental hospital or a morgue somewhere. By the time the dear reader gets to the 'somewhere', they are either confused (Art) or depressed (Easy Rider). 

We all have a road story, and it is our life. No one can possible understand the route we took as we cannot understand it completely ourselves.  If you tried to lead a full life, then the road is full of unexplained twists and turns that seem either naive or foolish as you look back.  But, you took the road and now are at some type of destination, if you are up there in years as Ol' Si is. You are the road you traveled. 

High School? Told to get into a trade. Plumbing was hot then.  Fixed VWs, went to Community College on lunch break at noon.  What the hell, I will take Calculus. There were 39 guys, 37 of whom said they wanted to go to med school, I was doomed. That girl? A math genius. aced every test. 

Prof, who was a semi-retired Engineer told me I could DO IT, pass the class. No screwing around, no excuses, no 'poor kid struggling' crap. Just study. Office hours if needed, which I did. Girl in class helped me for the price of a cup of coffee.  I made it over the bridge, sober. Passed. First time in my life I put my mind to something really hard and succeed.  

You can talk about the biggest rush in your life. Your first beer, your first kiss, the first time you rode in an early Porsche Turbo.  I will pick the C+ in Calc 1A. First step on the journey,  one that got a lower class, blue color kid started on the roadtrip. One he could never have imagined. 

Ended up here.  What a drive.