Reggie Middleton

Reggie Middleton

Resident Contrarian Badass at BoomBustBlog (you can call me Editor-in-Chief)...

Disruptor-in-Chief at Veritaseum.com, where we're ushering the P2P Economy.

 

Let's keep this short and simple. Up to two years ago, I claimed that Apple's tablet market share will be subsumed by that of Android's, and it's margins will follow suit. If one were to Google this topic, this would be the result:

        Mar 16, 2012 - Apple's iPad Is Losing Market Share And Profit Margin As Apple Hits All... 

 Call The End Of The Fat Margin Tablet – Including The Pretty iPad, With Proof! and I also said on BoomBustBlog that miss will occur 4 to 6 quarters.

        Sep 28, 2012 - Apple Margin chart As you can see in the chart above, the margins.. 

 In the first quarter I lamented on the drop in both margin and market share of the iPad... Call The End Of The Fat Margin Tablet – Including The Pretty iPad, 

        Dec 14, 2012 - The iPad mini appears to be on track to actually outsell the iPad 4 

Apple released the iPad mini in response to the success of 7 inch form factor tablets... Most Accurate Apple Analysis Ever Made - Share Price, Market Share, 

        May 16, 2011 - Several months ago, amid all of the hoopla of the iPad 2 launch, I illustrated .

..  One, Apple's stunning margins and sales growth will not be able to ...  as netbooks ate away at Apple market share) and reinvented the tablet PC.

        Jun 3, 2011 - I have dedicated a decent amount of BoomBustBlog real estate

... the PC, We Call The End Of The Fat Margin Tablet – Including The Pretty iPad, With Proof!.... Apple's share price and market share benefit from two of the most 

Now, jump back into the BoomBustBlog time machine to Jul 29, 2013 at 11:55 AM and you will find the Boy Genius Report (BGR.com) reports: History repeats itself: Android tablet shipments blow past iPad

Whether or not people are really using Android tablets, it has become clear thatAndroid tablet shipments are absolutely exploding as Apple’s overall iPad shipments decline. Thelatest numbers from Strategy Analytics show that Android tablet shipments absolutely crushediPad shipments in the second quarter of 2013, as the 34.6 million Android tablets shipped on the quarter more than doubled the 14.6 million tablets that Apple sold. Again, however, Strategy Analytics is comparing Android vendors’ channel sales to Apple’s end-user sales. Overall, Android tablets were said to account for 67% of all tablets shipped in Q2 while the iPad accounted for just d 28.3%. Just one year earlier, Android tablets accounted for 51.4% of all tablets shipped while the iPad held a 47.2% share. Strategy Analytics says that cheaper tablets from Google, Amazon, Samsung and white box vendors have all been surging lately while Apple has struggled to make a low-cost tablet capable of competing in high-growth emerging markets.

As excerpted from "Is It Time To Buy Apple As A Valuation Play? The Contrarian That Called The Top In Apple Weighs In":

 

The Apple Profit Engine Has Stalled & Is Rolling Downhill

 

Apple is facing a shart decline in the margins of its top two value drivers. May I also add that these two value drivers are 83% of Apple's revenues and an even greater portion of its profits. Such a drastic concentration in only two products who have reached their zenith is not a good thing!

 

Click the graphic once to view, twice to enlarge to printer quality...

 

Reggie Middletonss Ultimate Apple Value InfographicReggie Middletonss Ultimate Apple Value Infographic

 

Of course, there is a point at which Apple is a good buy. After all, they have a lot going for them. The question du jour is, exactly what is that point? I refer my subscribers to the research documents below for the answers... 

Subscribers, download the Q3 2013 valuation reports (click here to subscribe).

The update from two months ago is also of value for those who haven't read it. It turns out that it was quite prescient!

  1. File Icon Apple 1Q2013 update - Pro & Institutional (Technology)
  2. File Icon Apple 1Q2013 update - Retail (Technology)

Related reading...

Wednesday, 17 July 2013 10:50

Options Trading - Using a Risk Reversal on Apple

 What Sell Side Wall Street Doesn't Understand About Apple - It's Not The Leader Of The Post PC World!!!

Apple is Materially & Quickly Losing Global Market Share! Clear Indicators Of Permanent Downward Moves In Its Peer Group

Apple is rapidly losing global market share over and the trend is worsening. This has ALWAYS signaled the beginning of the end for its peers. Reference Is Tim Cook Cooked? Market Share vs Profit Margin, part 2 - Follow What I Do, Not What I Say!

Following up on my timely post "Here Come Those Municipal Defaults That Everyone Said Couldn't Happen, Pt 2", I comment on Meredith Whitney's OpEd in the Financial Times. If you remember, she - like I - warned of municipal defaults years ago and was ridiculed for such. Ms. Whitney is quoted as saying:

"As jarring as the reality may be to accept, Detroit's decision last week to declare bankruptcy should not be regarded as a one-off in the U.S. municipal market." she said.

"There are five more towns like Detroit in Michigan alone. There are many more municipalities across the country in similar positions."

"The bill for promises past is now so large for some cities and towns that it is crowding out money for the most basic of services – in the case of Detroit, it could not even afford to run its traffic lights," she said.

"Will [lawmakers] side with taxpayers, unions or the municipal bondholders? If they back residents, money will be directed to underfunded public services at the expense of pensions and bondholders. If they side with the unions, social services will continue to be cut and the risk to bondholders will increase considerably. If they side with bondholders, social services and pensions are at risk."

In the case of Detroit, elected officials, for the first time in a very long time, are siding with residents, Whitney said. This is a new precedent that boils down to the straightforward reality of the survival and sustainability of a town or city, she said.

"After decades of near-third-world conditions in the richest country in the world, the city finally stood up and said enough was enough,"

Well, this is the problem. Defaulting on revenue bonds where the underlying asset (ex. a housing project, utility, or infrastructure project) is not generating the sufficient cash flows is part and parcel of the risk of investing in said class of bonds. This is widely accepted and understood, which is likely why those bonds have a slightly higher yield.

For some obscene reason, defaulting on the general obligation bonds which purportedly carry the "full faith and credit' of the municipality as a back stop is deemed as wholly different affair. The reason? Who the hell knows? This is a point I tried to drive home in the original  Here Come Those Municipal Defaults That Everyone Said Couldn't Happen article in 2011. Backing by the full faith and credit of a public entity does not make an investment risk free. To the contrary, if said entity is fundamentally insolvent, the investment is actually "riskful"as opposed to risk free.

Treating these bonds as unsecured in the bankruptcy is essentially the way to go. If you don't want to do that, well you can still consider them backed by the full faith and credit of the insolvent municipality, which is essentially unsecured - and move on anyway - particularly as many potential collateral assets of value would have likely been encumbered by agreements with a little more prejudicial foresight.

A GO default from a city the size of Detroit will dramatically change the face of GO bonds going forward. Now that the hoi polloi and tax free investing masses have been awakened, a true accounting of the risks involved will cause a much more realistic risk premium to be placed on GO bonds everywhere.  This wll be in addition to the natural increase of rates coming from the end of a 28 year natural bull market in bonds, in addition to the economic and market snapback borne from the end of the artificial eztension of said bull makret through ZIRP and direct credit market maniputlation by the Fed.

Yes, a triple whammy coming to a bankrupt (or soon to be) state, city, town, or political subdivsion near you!

The good news? Those pension funds that hold municipal assets (due to the uneccesary tax shielding from muni's in a qualified account, not many) will get a higher yield on their bonds. The bad news? That yeild likey will not get paid!

This may push rates higher in general, after all they're artificially low to begin with. ZIRP has done it's fair share of damage, and a snap back to market rates will hurt all the more...

And then there's those monolines who're just working out that 90x leverage problem from the housing crisis (reference A Super Scary Halloween Tale of 104 Basis Points Pt I & II, by Reggie Middleton)...

And then...

Of course, we can't leave out those rating agencies who warned us all about the impending doom...

And from the must read post, Banks, Monolines, and Ratings Agencies As The Three Card Monte (Wall)Street Hustlers! Its a Sucker's Bet, Who's Going to Fall for it in QE2?

Three Card Monte is a scam designed to separate a fool from his/her money. It is quite efficient, particularly when fools are involved!

The Boogie Down Bronx

The big secret to the Morgan Monte Scam is that it is 10% sleight of hand and 90% teamwork. Even if you are not deft enough to capture the sleight of hand, the key in avoiding it is to recognize the team players, whose key player is often YOU - The Mark!

The retail/typical qualified fund investor = "The Mark"

Monolines/FIRE sector= The Operator/Hustler!

Sell Side analysts = "Jess"

Rating agencies = "Paul"

How its done in the UK

Reenactment of 2009's entire year of Wall Street earnings

How its done on Wall Street, see outset...

Next, up we let the late Biggie school you on how Wall Street banks follow the Ten Crack Commandments!

I have yet to release my review of Google's most recent quarter earnings results, but thus far I've seen nothing that would materially sway me from the conclusions drawn from the last set of forensic valuations released to subscribers (Google Q2 2013 Update: Valuing Possibly The Most Powerful Co. In The World?). One question that I am getting is "Did Google overpay for its Motorola acquisistion?"
Quick answer, I seriously do not think so. Please understand, the Wall Street fee/commission churning machine along with the tabloid financial media which has to churn content for advertising eyeballs has taught many (if not most) to view the investment world one fiscal quarter at a time. This is not a prudent, not sustainable model for building long term success. One of the most admirable traits of Google's management is their proclivity to think longer term, and to plan and invest accordingly.
Below are excerpts from the big Google report that I put out two years ago. It outlines the acquisitions that Google had made to date. Among these acquisitions are investments that the financial media and the sell side analytical community swore were overpriced because they actually ate their own BS sandwiches, literally convincing themselves that one quarter at a time is the way to run a business poised to take over an industry.

Three examples come to mind also happen to be three of the largest acquisitions - YouTube, AdMob and Android. Were they worth it? What single company controls and/or leads in internet video content distribution, computing OS (not just mobile OS, but all computing OSs), and mobile advertising? All three of these acquisitions amounted to less than $5 billion and for that amount and additional investment, Google literally and absolutely dominates each and every one of those industries. 
Google Final Report Sep 29 Page 53Google Final Report Sep 29 Page 53 copyGoogle Final Report Sep 29 Page 54Google Final Report Sep 29 Page 54 copy

Compare and contrast this to the Microsoft/Apple/Blackberry consortium that paid $4.5 billion for 6,000 telecomm related patents from Nortel. These companies are ALL currently lagging in growth and reach compared to Google, even if you just consider this one investment or if you look at their entire enterprise. The reason? Google's management is considerably more entrepenurial and are more adventurous at risk taking.

Google purchased Motorola for its cell industry patents for protection of its Android OS. Everything else that came with the deal was gravy. Factoring the handset/hardware biz, the set top box biz (recently sold) and the patents, the patents were purchased extremely cheap (17,000 of them) compared to what the RIMM/MSFT/Apple consortium paid for the Nortel patents ($4.5B for 6,000 patents). Even with the patent value significantly downgraded, it's still was a better deal than its competitors. Motorola can now be used to directly drive down the cost of hardware and hardware profit margins.

Motorola sales price in billions
Purchase  $(12.50)
Sale of Set Top Division  $2.35
7 years tax loss carryforward  $5.60
2012 Motorola Mobility US NOL  $1.00
2012 Motorola Mobility Foreign NOL  $0.70
Net Purchase Cost for 17,000 patents & Motorola Mobility handset business  $(2.85)
Cost per patent  $167,647 This is a rough estimation to use as a gauge. Each patent is different, of course!
Recent Microsoft Rulling against Google demands $1.8M annual licensing fee for 2 patents.
Using this ruling, which was widely considered a loss of Google, we get the following ANNUAL yield on investment 537%
One must realize that Google Purchased 17,000 patents and the first cell phone manufactuer as well as one of the top tier manufacturers for nearly half of the their competition paid for just 6000 patents - RIMM/MSFT/Apple consortium paid $4.5 B for 6,000 Nortel patents.
Google will use the Motorola Mobility unit to further push down smartphone margins and costs instead of using it to make more profitable phones. Remember, Google is in the data business, not the smartphone business. The more people that have smartphones at any cost, the more money Google makes.   

One of the reasons why I think Google's missing of the mean analysts forcasts this quarter is not that big a deal is the extremely value rich product pipeline of product's nearing launch. As a beta tester and early explorer of Google Glass, I'm convinced that Microsoft, Blackberry and Apple have absolutely nothing to compare. Expect Google to expand its advantage over these companies materially over the next fiscal year.

Here I present...

Glass for the Hospitality Industry

Glass for Real Estate

Subscribers, click the following links for my updated price targets on Google (click here to subscribe) and read  Google Q2 2013 Update: Valuing Possibly The Most Powerful Co. In The World?:

The biggest risks to these price points are:

  1. A market that's being levitated by central bank magicians running short on magic spells...
  2. Regulatory pressure, which I feel is quite material and inevitable, but will not be a major factor in the near term. 

Last Wednesday I posted BS... Defined: Bernanke Seeks (BS) to Divorce QE Tapering From Interest Rates - OR - Economic Prestidigitation! wherein I ridiculed the notion of being able to withdraw economic financial aid while expecting rates not to spike. The fact of the matter is we are the at the end of a 33 year old bull market in credit. Or, to put it more accurately, we are at the end of a 5 year synthetic extension of a 28 year old credit market bull run....

I urge readers to keep in mind what I expoused in Apple Bonds Proven To Have A Nasty Taste wherein Apple bonds lose 9% in six weeks:

We Clearly & Obviously Ending A 3 Decade Bull Market, Likely At The Tail End Of The Largest Global ZIRP Experiment Ever!

And this final aspect is the kicker. We are likely culminating the end of a three decade secular bull market in bonds. Why in the world would anyone want to buy debt now, in a good, bad or mediocore company? Reference a chart of ten year rates over time, and you will see that once you get this close to zero (and the applied end to excessive ZIRP), there's no way to go but up. As excerpted from theMarket Realist site:

Yes, this goes for muni investors as well! Municipalities have a dual edged sword up the ass. Not only are higher funding rates to be expected from a shifting market, but the actual fundamentals of municipalities are in the crapper as well, putting an even larger premium on what is already a steep increase in funding costs. What do  you think happens next?

It's not as if we couldn't see this coming a mile away - or at least 2 to 5 years ago...

Wednesday, 14 May 2008 The Municipal bond market and the securitization crisis

ARS market – composition as on 31 December 2007

image004.gif

Student loans? Ruh Oh!

Saturday, 24 May 2008 The Municipal Bond Market and the Asset Securitization Crisis, pt 2

image001.gif

Thursday, 20 January 2011 Here Come Those Municipal Defaults That Everyone Said Couldn't Happen

In the multifamily housing segment, default rates increased significantly and were extremely high for the period 1987-90, i.e. at the time of the S&L crisis when real estate lending was reckless due to declining lending standards by banks and other financial institutions. The default rate peaked in 1988 in the eleven year period reviewed to 4.31%, followed by 3.41% in 1989.

 Don't let me say I told you so. Will those monolines start feeling part 2 of credit crunch?

Ambac is Effectively Insolvent & Will See More ... 

What is the Fallout of the Ambac Bankruptcy on the ...

My Analyst's Comments on MBIA/Ambac/Moody's ...

Moody's Affirms Ratings of Ambac and MBIA

Bloomberg reports: Bernanke Seeks to Divorce QE Tapering From Interest Rates

Federal Reserve Chairman Ben S. Bernanke will have a chance to use testimony to Congress today to drive home his message that winding down asset purchases won’t presage an increase in the Fed’s benchmark interest rate.

Bernanke has said the Fed may start reducing $85 billion in monthly bond purchases later this year, assuming economic growth meets the Fed’s predictions. At the same time, policy makers’ forecasts have indicated the federal funds rate won’t rise until 2015, long after Bernanke’s second term ends Jan. 31.

... Treasury 10-year note yields were little changed at 2.53 percent as of 8:38 a.m. London time. They touched 2.51 percent yesterday, the lowest since July 5, in anticipation of Bernanke’s testimony, even as economic reports showed that U.S. industrial production rose by the most in four months in June and inflation picked up toward the Fed’s goal, supporting the case for a reduction in quantitative easing.

“He’ll say a slowing in the pace of asset purchases isn’t a tightening of policy, and it’s actually still an easing of policy just at a slower pace,” said Josh Feinman, the New York-based global chief economist for Deutsche Asset & Wealth Management, which oversees $400 billion, and a former Fed senior economist. “It doesn’t imply that they’re going to be tightening policy any time soon. They’re not.”

Global stocks and bonds retreated after Bernanke on June 19 outlined the conditions that would prompt the Federal Open Market Committee to reduce and eventually end asset purchases. His remarks pushed the yield on the benchmark 10-year Treasury to a 22-month high and erased $3 trillion in value from global equity market value over five days.

Technically, Bernanke can say that he can taper bond purchases without raising the Fed Benchmark interest rate, for he can. He is in complete control of said rate. Reality dictates something a little different though. The Fed benchmark interest rate doesn't equal market rates. Ask Dr. Greenspan how difficult it is to get mother market rate to bend to your will by simply manipulating the Fed benchmark rate. He lost control (as if he ever had it) of market rates during his term as he tried to play economic god. Expect the same efforts and the same results from Bernanke.

I urge readers to keep in mind what I expoused in Apple Bonds Proven To Have A Nasty Taste wherein Apple bonds lose 9% in six weeks:

We Clearly & Obviously Ending A 3 Decade Bull Market, Likely At The Tail End Of The Largest Global ZIRP Experiment Ever!

And this final aspect is the kicker. We are likely culminating the end of a three decade secular bull market in bonds. Why in the world would anyone want to buy debt now, in a good, bad or mediocore company? Reference a chart of ten year rates over time, and you will see that once you get this close to zero (and the applied end to excessive ZIRP), there's no way to go but up. As excerpted from theMarket Realist site:

 

This is a guest post from Marcus Holland. I don't endorse nor necessarily agree with the opinion and research expressed herein, and it is supplied as an OpEd piece only.

_______________________________________

Apple Stock (NYSE:AAPL) is trading slightly lower despite news that the company colluded with five major U.S. publishers to drive up the prices of e-books in the months ahead of the technology company entering the market in 2010.  Option volatility in the wake of this news, has declined slightly and sentiment surrounding the company has remained strong.

In a civil antitrust lawsuit, the Department of Justice claimed that Apple agreed with the 5 publishers in January 2010 to allow them to increase prices for best sellers and new releases in response to publisher Amazon.com $9.99 price point for those books on Amazon.com Inc.

The judge will likely schedule a hearing on a request by the Justice Department for injunctive relief, which could include requirements that Apple not enter into another agency agreement to sell e-books for a two-year period.

aapl stock range

Despite the blow to Apple the stock technically remains sound after recently testing support near 390 per share.  Resistance on the stock is seen near the 50-day moving average near 433.  Momentum on the stock is gaining traction as the MACD has recently generated a buy signal.  This occurs when the spread (the 12-day moving average minus the 26-day moving average) crosses above the 9-day moving average of the spread.  The RSI (relative strength index) is printing in the middle of the neutral range near 50, well below the overbought levels of 70 and and above the oversold levels of 30.

aapl stock volatility

Implied volatility on AAPL edged higher, prior to the release of the decision and ahead of earnings in the coming weeks.  The recent lows near 25% represent an excellent opportunity to purchase volatility, while levels near 45% reflect a robust place to sell volatility.  At the current levels near 30%, options traders who are bullish on the stock could use a risk reversal and use the skew on the puts to benefit from the structure.  The structure mitigates the effect of implied volatility on a directional play.

In a risk reversal the investor will purchase a call and use the proceeds of a sold put to finance the trade.  A trade that would allow an investor to earn theta is an August 450-390 risk reversal in which the investor collect 10s cents by purchasing the 450 call for $5.20 and selling the 390 put for $5.30.  By using recent support at $390, and investor has a good spot to purchase the stock if Apple’s stock turns lower.

Comments from Reggie on the fundamental side...

The Apple Profit Engine Has Stalled & Is Rolling Downhill

Apple is facing a shart decline in the margins of its top two value drivers. May I also add that these two value drivers are 83% of Apple's revenues and an even greater portion of its profits. Such a drastic concentration in only two products who have reached their zenith is not a good thing!

Click the graphic once to view, twice to enlarge to printer quality...

Reggie Middletonss Ultimate Apple Value Infographic

Apple's Competition Is The Greatest It Has EVER Been!

Apple's competition is the greatest it has ever been, and features companies who are literally at the top of their game. We are talking a lot of companies, and at the top of a very difficiult game as well. Reference What Sell Side Wall Street Doesn't Understand About Apple - It's Not The Leader Of The Post PC World!!!

Apple is Materially & Quickly Losing Global Market Share! Clear Indicators Of Permanent Downward Moves In Its Peer Group

Apple is rapidly losing global market share over and the trend is worsening. This has ALWAYS signaled the beginning of the end for its peers. Reference Is Tim Cook Cooked? Market Share vs Profit Margin, part 2 - Follow What I Do, Not What I Say!

For those who don't subscribe and/or haven't already seen it, here is the video that tells (nearly) all about Apple, from beginning (Q3 2010) to end.

Of course, there is a point at which Apple is a good buy. After all, they have a lot going for them. The question du jour is, exactly what is that point? I refer my subscribers to the research documents below for the answers... 

Subscribers, download the Q3 2013 valuation reports (click here to subscribe).

The update from two months ago is also of value for those who haven't read it. It turns out that it was quite prescient!

  1. File Icon Apple 1Q2013 update - Pro & Institutional
    (Technology)
  2. File Icon Apple 1Q2013 update - Retail
    (Technology)

 

Glass vs iPhone subsidized

My latest appearance on the Max Keiser show at 11:52 in the video.

As for Android, Google, Glass, security and privacy, I took the liberty of posting the discussion from the my last article on this topic. It should be of interest to both the paranoid and the techy types....

0#14 Continuing what I said on Google Glass — John Boyd2013-07-16 12:02
Reg, As to your replique to my comment about Google Glass being a real time snooping tool for the NSA, I would say that what you say is true for those of us with the technical skills to build from the Android source code and then load it on to our phones (maybe there is a business opportunity there). The other issue is whether one can control what gets automatically loaded on the phone subsequent to deploying one's own build. Most people would not be up for the challenge. But I'm seriously thinking there's an opportunity there! :-)
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0#13 RE: Irish Fraud, Google, Glass, NSA and a False Sense of Security — me 2013-07-15 19:28
Reggie, love your posts, mostly. Just one comment. Android is open source. Google apps are not.
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0#12 Spying — tfs 2013-07-15 07:44
There is no safety in using Andriod vs IOS vs Windows.

Everything you do is being monitored at carrier level. The NSA taps the cables.

Anyone who thinks DuckDuckGo and StartPage are safe are delusional. Entry and exit points to these services are again tapped at the wire level. The NSA would have no problems in illiciting the certificates supporting https.

You can see why American telecom companies want the contracts to rebuild communication infrastructures in countries their Wmpire has just dismantled.
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0#11 RE: Irish Fraud, Google, Glass, NSA and a False Sense of Security — Nat 2013-07-15 04:39
Quote:
Yet through disinformation borne ignorance, we already have the masses clamoring for a "safe' closed proprietary OS like iOS as compared to an open tool chest exposed to oh so many eyes.


That's not true. No-one is choosing iOS or Windows OS in order to be "safe". Similarly, next to no-one is choosing Android in order to be safer either.

OS's are chosen because of the hardware people think they want after seeing the promotion. If not the hardware, people choose the OS because of the apps they've seen their friends use, or promoted 'cool' apps.

As you say Reggie about the banks, no-one cares until some large section of society really suffers a loss. When it comes to surveillance and police states, waiting for that loss means you've already left it too late (unless you're watching from another country..).

As an aside, I really don't see people warming to being so constantly connected to hardware/communication etc. You will get a lot of people adicted to it like they are the internet, 24 hour news etc but I think it will wear a lot of people down and they'll reject the idea in the longer term - even you took off the headset in the Keiser Report interview the other day as I presume it was a distraction?
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0#10 RE: Irish Fraud, Google, Glass, NSA and a False Sense of Security — Betty B. 2013-07-14 21:06
>You don't have the ability to submit 
>changes to even be considered for 
>acceptance

Your precious Google bozos made a mess of their Open Source modules. They scooped up open source, made copies of it in such as way changes can't be freely propagate back and forth to the original Open Source they took.

They just scooped up Open Source, copied it and moved it into their brand new projects. Really just a copy and paste type hack. 

Google are using Open Source, but have done so it such as way as not to contribute back to the ecosystem they are using. Yes, they have their own brand new Open Source project with a brand new name, but the original modules they scooped up won' have changes easily propagating back and forth.

This is what happens when Google hires people straight out of college with no real world experience. Like hires like.

Google Chrome is hardly a beacon of engineering brilliance on Google's part. The hard part was done by Apple - WebKit.
Apple produced the first fast JavaScript compiler.
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0#9 RE: Irish Fraud, Google, Glass, NSA and a False Sense of Security — Betty B. 2013-07-14 19:23
>Windows and iOS all have the same 
>problems, except for the facts that 

Isn't the core of iOS based on the Open Source operating system FreeBSD? FreeBSD rocks.

Apple's Safari web browser is based on the Open Source component WebKit, which is turn in based on the Open Source web browser Konqueror. Apple's JavaScript to machine code compiler (used in their web browser Safari) is again Open Source.

WebKit is a HTML5 and CSS renderer and supports multimedia and much more.

Google based their Chrome web browser on Apple's WebKit. If it wasn't for Apple, Google Chrome would exist in its current form.

By the way when I've developed websites, I've noticed the exact same JavaScript bugs in Apple's Safari and Google's Chrome. I wonder how that could have happened. It could just be a coincidence.

As I said before even if you have the entire source of Android read by people around the world, it still isn't secure. There are so many other lines of attack outside the handset.
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0#8 RE: Irish Fraud, Google, Glass, NSA and a False Sense of Security — Betty B. 2013-07-14 19:15
OK you do have a valid point. A mainly Open Source operating system has to be more secure.

But really there are so many lines of attack.

By default Android does not have good security - who you communicate with can still be tracked. You need to get 3rd party software to be really secure on Android.

Building an operating system from source code is a difficult operation. There will be so many dependencies. Not many people will be able to do this.

I may make mistakes in some of my points, but you are meant to read all of what I say and take it as a whole.

> Your multiple posts here 

Isn't that an ad hominem attack?

I am not a fool. Nor am I something that has crawled out of the woodwork.

I run a small business that sells a relatively inexpensive product to a very large number of people. I've sold my product to Microsoft, Intel, Apple and a vast number of other companies. I am not a fool. I've even sold my product to at least two companies that Google has taken over.

You are incidentally one of my favourite guest speakers to appear on the Keiser Report. You concisely summarize Google's business model as cost-shifting. I can see the smartness is saying things concisely.

I do advertise on bing.com and on other websites as well. They charge $0.05 to $0.15 per click. As a lot of companies only get 1 sale per 100 website visitors, this is a fair charge.

Google charging $0.80 to $5 per click is excessive. I don't know why Google does this. Surely the number of potential advertising customers they have is vast. They should aim to have low costs and make it up on the volume. To extent this is what I do.

Look I am really trying to make a valid point here and what I say is echoed across the Internet.

Google charges advertisers too much. All their money for acquisitions and their internal army of people that can't write software anymore without getting a check book out and buying it has a cost. That cost is borne by advertisers.

All I am saying is that Google is a hard man over money.

I have studied all the other companies in my niche. I see competition selling products at a very low cost if they don't use Google advertising. I see competitors charge 50% more than me when they turn on Google Adwords.

I just want to get a word out that having everybody use Google has a cost. That cost is the increased cost of products sold by everybody that is not Google.

Google spanks you if you use the display network as they say your click-rate is lower and so your cost per click on the search network has to go up.

If you use an exact phrase match with the words x, y and z and another company with nothing to do with you occasionally advertisers with the words a, b and z, then Google will spank you again as they say the competition is paying more, when they aren't really your competition at all.

I see the cost of products sold on the Internet go up 50% and all the cash rolls into Google.

Monopolies are bad. People need to use other search engines such as ixquick.com and duckduckgo.com
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#7 RE: Irish Fraud, Google, Glass, NSA and a False Sense of Security —ReggieMiddleton 2013-07-14 15:59
I have a very balanced view. Your multiple posts here show that your view may be less than balanced. If you have a problem with Google's advertising methods, you should choose another provider. There are alternatives, particularly in social media. You can also alter your approach to Google. The algorithm change was likely more to improve the credibility of search results than to hurt your business. Either way, you can find experts that maximize efficacy of coding for Google search results. Comparing to Bing, Yahoo, etc. is less relevant they have inferior products when one factors in capabilities, which is likely why they have less market share.
The network effect creates an unfair advantage, yes.... but to obtain the network effect advantage you likley had a superior product to begin with. Ask users of Microsoft Office...
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#6 RE: Irish Fraud, Google, Glass, NSA and a False Sense of Security —ReggieMiddleton 2013-07-14 15:53
Quoting Betty B.:
> Who has the time to read through a mountain of computer source code? Computer source is difficult to read and understand. Reading source code written by other people and understanding it, will take longer than writing it yourself.

Nah! We are not protected.

Just listen to the objections you are raising and you can see how and why Android is safer to the populace than all of the popular competition. Windows and iOS all have the same problems, except for the facts that
  • You dont have access to the code

  • You don't have the ability to submit changes to even be considered for acceptance

  • With Android, you don't need for Google to accept your personal changes, you can simply roll your own personal version and use it for yourself which should be the preference for the paranoid types. You can't do this with any other popular OS.

  • The amound of independent eyes on Android trumps that of any other OS, by far. If something has a chance of getting caught (ex. spy code) it will likely get caught on Android code base. This has already happened, read XDA developers code posts for the HTC Evo
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0#5 RE: Irish Fraud, Google, Glass, NSA and a False Sense of Security — Betty B. 2013-07-14 14:22
Forgot to say, you can do anything you want with software.

There is nothing to stop someone taking Open Source software and just before building it into runnable code, adding a crack to make intercepting or decrypting communication easier.

How can one little change be spotted in reams of incomprehensibl y machine code assuming you even know what version of all the different source code modules to compare against? Even if you read through all the code it would take you a lifetime.
 
#4 RE: Irish Fraud, Google, Glass, NSA and a False Sense of Security — Betty B. 2013-07-14 13:20
> This means that anyone and everyone can 
> modify the code base and if those 
> modifications (improvements) are 
> accepted into the official code base

Yes, but there is still Google sitting as a referee deciding what gets into the official code base.

Suppose I want to triple the bit length they use for SSL / https, will Google let me submit the changes?

If all communication is being snooped then you have no protection. Even if you use encryption, the NSA will still have a record of who you are communicating with and how much traffic goes between you and where they are located.

Even if you use encryption, if the bitlength isn't high enough President ODumber will crack it. I don't know enough about cryptography, but if the algorithm has a flaw then you are vulnerable as well.

They can still tell what search terms you are using.

Do you use an encrypted email client? Encrypted voice over a phone line? How do you know for sure the software you download doesn't have a flaw in it. Very few people are smart enough to understand the level of mathematics to determine this, plus have knowledge of software as well. Who has the time to read through a mountain of computer source code? Computer source is difficult to read and understand. Reading source code written by other people and understanding it, will take longer than writing it yourself.

Nah! We are not protected.
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0#3 RE: Irish Fraud, Google, Glass, NSA and a False Sense of Security — Betty B. 2013-07-14 11:31
Perhaps Reggie should try to get a more balanced view of Google. I can't say enough monopolies are really bad for the world. Maybe consumers can get some free stuff in the short term. But free doesn't exist. If one person gets a freebee, someone else is getting screwed out of money.

The Internet freed people to produce innovative goods without high start-up costs of having to have bricks-n-mortar shops. I myself started up a company producing a product head-and-shoulders above all of the competition. My website used to be at the top of Google's search results. Whether it is intentional or not, Google have jacked up my advertising costs and bang! in one search algorithm update knocked me off the front page. On bing.com and other alternative search engines, I'm near the top.

When I started out, my website didn't have good natural search results. But I could reach a large number of customers cheaply via cheap click rates. That time has passed now. Google's greed is blocking off the Internet for small companies wishing to start up with limited advertising budgets.

Reggie get a balanced view of what is going on and look at the links below.

benedelman.org/.../...


www.benedelman.org/
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0#2 RE: Irish Fraud, Google, Glass, NSA and a False Sense of Security — Betty B. 2013-07-14 11:23
Reggie Middleton is a smart man and I always enjoy listening to his insights.

But there is a flip-side to Google and Reggie should think about this as well.

Reggie waxes lyrical about Google’s cost shifting and cheaper-than-free goodies. There is a real cost to this.

I have advertised on Google Adwords for years. That experience has made me dislike Google as a company. I got stung with obvious click fraud. I emailed Google at least twice. They denied click fraud ever takes place. I have paid Google vast sums of money over the years and as a long-standing customer they should have taken the time to examine the evidence I gave them. My whole daily budget was used up immediately at the start of each day on an Indian screensaver website. Yes, immediately. When I turned off the display network, my daily budget wasn’t used up in a whole day when my adverts displayed direct on google.com. Plus I looked in my webserver logs and I had no real visitors from this 3rd party publisher.

Google Adwords contains a mass of code trying to extract as much money as possible for Google from advertisers, even at the expense of making it uneconomic to advertise with them.

I displayed for a while on the display network, where typically the click-through rates are lower. I emailed Google about my eye-wateringly high click costs on the search network. I was told the display network was making my search network costs higher! This is wrong. There should be no linkage between the two as everybody knows the click through rates on the display network as lower than it someone was doing a specific search direct on google.com. If you get low click through rates, Google bumps up your cost per click.

For long stretches of time, I have had no competition in my niche advertising on Google. I sell low cost products and quite frankly none of my competition can afford Google’s high costs in a low product cost market. Yet my click-rates are uneconomically high in the absence of direct competition. This is so wrong. Google's auction model is opaque at best.

Google explains this via broad matching and synonyms. It seems if a big company – with a totally unrelated product to yours – uses broad matching for their keywords, then even only a 1 keyword overlap in a phrase of 3 -4 keywords, will bump up your click costs. This is wrong.

If bing.com can charge $0.05 for a click, then why doe greedy Google need to charge at least a whole order of magnitude more and often much more than that?

I should also mention that I set a daily budget. Google regularly went over that increasing my monthly costs to well over what I can reasonably pay. I searched the Internet and I found out Google has been sued over exceeding peoples’ set budgets.

My response was to set my daily budget 20% below that wish I wish to pay. Everything is geared up by default to sting people – perhaps unintentionally .
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0#1 RE: Irish Fraud, Google, Glass, NSA and a False Sense of Security — jason lantz 2013-07-13 16:35
this is one of the most uninformed statements I've ever heard.

 So, let's revisit Glass. Glass is a cool device, but from a hardware perspective, it's not expensive to build once engineered. If the Moto X can be sold for $200, that will likely be the ceiling for Glass, which would probably be sold for less if subsidized by Google. Throw in a half billion dollar ad budget (Glass is already extremely popular and is not advertised or even for sale yet) and you have a definite game changer in the mix.

Imagine if these computer glasses that changes the way we do everything sold for $150, with the full marketing awareness powers of Google behind them. Uh Oh, it's a whole new world.

Glass vs iPhone subsidizedGlass vs iPhone subsidized

Subscribers, click the following links for my updated price targets on Google (click here to subscribe) and read  Google Q2 2013 Update: Valuing Possibly The Most Powerful Co. In The World?:

The biggest risks to these price points are:

  1. A market that's being levitated by central bank magicians running short on magic spells...
  2. Regulatory pressure, which I feel is quite material and inevitable, but will not be a major factor in the near term.

From my appearance on RT's Prime Interest last Tuesday.

{youtube}UFHQER_Hetk{/youtube}

From one of my reader's comments on the topic of NSA, privacy and Android..

"most people see Google Glass as real-time snooping tool for the NSA."

That's because most people are (if your statement is in any way true) are ignorant to how things truly work. Glass is powered by Android, which is open sourced. This means that anyone and everyone can modify the code base and if those modifications (improvements) are accepted into the official code base then the whole world has the ability to examine those changes as well as the entire code base. 
This makes Android and the hardware running Android the safest popular mobile OS available because it is near impossible to hide things from driven eyes that want to find things.
Contrast this to a closed commercial system like Windows Phone or iOS where the government simply has to compromise one codebase or one company and it has an in to all users, none of which can see or modify what they have purchased.
NSA to Android is like having to lock a million doors, with tens of millions of keys floating around in the hands of hundreds of thousands of locksmiths. NSA to Apple iOS, et. al. is like having one door with one lock, and nobody has the key - locksmith or not!

If you were the NSA, which would oyu rather have as the world's primary OS? Mass adoption of a single commercial, closed system such as Windows of iOS is the NSA's wet dream in comparison to the veritable nightmare that Android and all of its eyes and tinkerer's must be. Yet through disinformation borne ignorance, we already have the masses clamoring for a "safe' closed proprietary OS like iOS as compared to an open tool chest exposed to oh so many eyes.

Let's face it, in order for the few to thrive, a majority have to suffer in apathy, ignorance and the resultant bliss before the storm! Is that the way it is? Is that the way it has to be? Well, apparently that's the way it's going down in Europe. I have issued very, very explicit warnings on the ex-sovereign entity known as Portugal. Despite such. and despite my track record on such matters (see Who is Reggie Middleton?), the financial media, sell side and practically the rest of the world hailed an "all's clear" as absolutely nothing has gotten better yet several things have gotten worse. 

What has come of it? Well....

From ZeroHedge: Portugal's Presidential Warning Spikes Yields To 8 Months Highs

UPDATE: 5Y now +126bps (biggest jump in 19 months - snce the record highs) and rest of Europe is catching their systemic risk flu

Bond Spreads...


Of course reasons are given for this spike that come from very smart people who do very impressive things. The fact du jour is that this spike was guaranteed to happen, and it was guaranteed to happen this year. That's right! Guaranteed, and all paying BoomBustBlog subscribers knew this to be a fact TWO and a half (that's 2.5 for the number nerds amongst us) years ago! Did I (or my subscribers) know that the Portuguese government would come close to blowing up this year? NO.

So, exactly how did we know? Well, let's start by acknowledging today's date. July 12, 2013. Next we dig into the BoomBustBlog archives, going back to...

Monday, 06 December 2010 The Truth Behind Portugal's Inevitable Default - Arithmetic Evidence Available Only Through BoomBustBlog

The inevitable truth of the matter is that several European states WILL default, and default they will. If Germany, or any other economy that still has its druthers to it decides to stand in front of said occurrence, it will likely be dragged down as well. The Germans apparently realize this. See this excerpt from our discussion on the topic regarding Ireland's prospects for default:

... from the post  wherein BoomBustBlogger Nick asked:

Reggie-

Do you have any reason as to why they are choosing 2013 as a deadline ? Seems like an arbitrary date.

Well, Nick, just follow the money  or the lack thereof…

So, what debt raising and servicing soveriegn nation that was unsustainable in 2010 was lent even more debt to become even more unsustainable. The chickens come home to roost in 2013, post IMF/EU/Bilateral state le veraged into Ireland loan/Pension fund raiding bailout! What Angela in Germany was alluding to was what all in the know, well… know, and that is that Ireland is already in default and those defaults have been purposely pushed out until 2013. Angela simply (and wisely from a local political perspective, although unwisely from a global geopolitical standpoint) admitted/suggested was that the defaults will be pre-packaged and managed ahead of time. The EU politbureau insists that politics rule the day, and no prepackaged structure be in place for the Irish defaults to be. This means the potential foe even more carnage through the pipelines of uncertainty!

 

Tuesday, 07 December 2010 The Anatomy of a Portugal Default: A Graphical Step by Step Guide to the Beginning of the Largest String of Sovereign Defaults in Recent History

... Let's jump straight into Portugal's situation, and remember that many of these countries have deliberately mislead and misrepresented their fiscal situations for years (see Once You Catch a Few EU Countries “Stretching the Truth”, Why Should You Trust the Rest? and Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse!).

This is the carnage that would occur if the same restructuring were to be applied to Portugal today.

Yes, it will be nasty. That 35% decline in cash flows will be levered at least 10x, for that is how much of the investors in these bonds purchased them. A 35% drop is nasty enough, 35% x 10 starts to hurt the piggy bank! As a matter of fact, no matter which way you look at it, Portugal is destined to default/restructure. Its just a matter of time, and that time will probably not extend past 2013. Here are a plethora of scenarios to choose from...

This is Portugal's path as of today.

Even if we add in EU/IMF emergency funding, the inevitability of restructuring is not altered. As a matter of fact, the scenario gets worse because the debt is piled on.

Monday, 12 March 2012 Portuguese Liquidity Trap: When You Add Too Much Liquidity To F.I.R.E. It Burns!

 

In this followup to Greece Is Trying To Convince Portugal To Make F.I.R.E. Hot I think we should get straight to the point - Anyone who doesn't believe that Portugal is clearly set up to for a bond route, and that it is seriously considering a default is either lying to themselves, believe human nature has changed, and/or really hasn't bothered to review the math. Here's proof of a Portuguese default presented with logic, numbers and pretty colorful graphs. The full spreadsheet behind all of the calculations, scenarios, bond holdings and calculations can be viewed online here (click this link) by professional level subscribers. Click here to subscribe or upgrade.

 

As I canvass NYC to gauge acceptance of ‪#‎Glass‬, ample evidence the device sexier than it is nerdy abounds.CAM00841 copy

At the end of the day, it's who you are and not what you wear that makes you feel confident, secure, and/or attractive. Those that say they feel silly wearing #Glass may rely too much on what they are wearing and not enough on who they are. With that being said, fashion is a key selling aspect, but as #Apple can attest, fashion is tantamount to fad and what's in this year is often out the next. Difficult to build a tech business model that lasts on such a framework. #Android proves functionality and superior business model will reign supreme longer term over focusing on fashtion sense.

On a separate, yet related note - numbers are coming out for the price, parameters and terms of Google's new Moto X customizable smart phone. It is allegedly highly customizable upon order, deliverable upon days, works with all major providers and unlocked, equipped with the best camera on the market, have the best battery life on the market and will sport both a $500 million advertising budget and a $250 price tag. That's right! $250! That's the complete purchase price, not the down payment to enter a contract. 

As per the WSJ: Google To Spend $500 Million To Market Moto X Phone

It’s set to spend $500 million or more marketing the showcase smartphone of itsMotorola Mobility MMI NaN% unit, according to a report late Monday in the Wall StreetJournal. Such a sum would easily top the mobile device marketing budgets of both Apple AAPL -0.38% and Samsung, the runaway market leaders in smartphones.

Apple and Samsung have the benefit of sizable marketing budgets. The two companies spent $333 million and $401 million, respectively, to advertise mobile devices in the U.S. last year, according to Kantar Media, a unit of WPP PLC. Google may end up spending more money than that on the Moto X phone alone, people familiar with the matter said.

Motorola's Mr. Woodside, speaking at The Wall Street Journal's D technology conference earlier this year, discussed some features of the Moto X, including its long battery life and ability to be "contextually aware," meaning it will adjust to its surroundings.

For instance, the device's sensors will know when a person is driving and automatically offer them the ability to give voice commands to get information from the device, including making calls or getting directions, said a person familiar with the matter. Mr. Woodside also said the device will be able to sense when a person is trying to take photograph and help them bring up the camera app more quickly.

Motorola also is hoping to appeal to consumers by letting them customize the device. In addition to being sold in wireless carrier stores, the device will be sold online, where people can choose from different colors for its back panel and front-panel trim. Customers also will be able to have a written engraving on the back of the device, similar to what Apple offers to customers of iPod music devices and iPad tablets—but not the iPhone.

From the Verge.com:

MOTO X COULD COST AS LITTLE AS $199 OFF CONTRACT

If the specifications don't impress, it's because Motorola is set to go after an affordable price point with the Moto X. As Woodside pointed out on stage at D11, off-contract smartphone prices have hardly budged since the original iPhone, and the company thinks it can carve out its own market of "high-quality, low cost" devices between $650 smartphones and $30 feature phones. From the rumored specifications we expect the Moto X could sell for as little as $199 off-contract.

Eventhough Google Has Officially Gone On Record To Confirm Reggie Middleton's "Negative Margin Business Model" Tactics, I still want all to rember that I warned about Samsung's fall earlier this year just as I forecast their rise against Apple (Deconstructing The Most Accurate Apple Analysis Ever Made - Share Price, Market Share, Strategy and All)!

Friday, 15 March 2013 Samsung's Galaxy S4 Flagship Device Is Outed, What Does It Mean For The Industry? SoothSayer Speaks Truth To Tech!

As I State Previously, Apple Is Done, Samsung Sets the Bar, and Hardware Still Looks To Be A Razor Margin Business In a Few Years If Not Less.

Thursday, 07 March 2013 Samsung Will Be Ready To Do That Fruit Thing, Just Like Blackberry & Apple - Courtesy Of Google, #MarginCompression!

Two and a half years ago I declared in my mobile computing wars series that Google would commoditize the mobile computing space. Four months ago, I reiterated that assertion in Smartphone Hardware Manufacturers Are Dead and did so yet again the following month in Computer Hardware Vendors Are Dead, Part Deux! These premonitions cover not only the obvious also rans and marginal companies who's management complained about losing the forest due to tree bark obstruction, but the very darlings of the industry as well. This includes the "used to be" market darling Apple (What Sell Side Wall Street Doesn't Understand About Apple - It's Not The Leader Of The Post PC World!!!) and even the current reigning champion, Samsung. That's right, I said it! Samsung! Hey, I'll say it again just to drive the point home, Samsung! How and why is that, you ask? Well, the same Google Android generated, creative destruction pathogen that brings us such great technology at such a rapid pace at such quickly diminishing prices that has wiped out those companies that I have warned of so extravagantly doesn't just disappear when your current market darling get's knocked off its perch. Let's recap & excerpt the link above so we can clearly isolate the common thread...

So, you ask, "How is it that hardware is dead?" Well....

    1. The open source OS paradigm calls for rapidly improving hardware specs at ever lower prices. I have pointed to evidence of this above, as these Asian OEMs produce ever better product at ever lower prices - just like the old school PC industry. This drives Google's info-centric business model which is why Google pushes free Android.
    2. After years of outsourcing manufacturing tech and IP integration to low cost labor Asian countries, those countries have found a way to produce trinkets of their own. Of limited quality and value so you say? Well, remember the iPhone is a Chinese phone, through and through -at least Chinese built. So now you argue, it's American designed, just Chinese made! Please peruse the Oppo Finder 5, a phone that's drastically superior to the iPhone 5 in practically every single way, retailing for $100 less than the cheapest iPhone 5 made. Low cost, low margin products combined with Google's free OS will drive the price of hardware down to near zero, if not negative. Google even has its own hardware arm now (Motorola) to facilitate this downward march in margins and prices. Suppose Google decides to create best of breed Nexus devices and give them away just below cost? Imagine the best smartphone available in the world, unlocked, without a contract, for the cost of a single monthly wireless phone payment??? Google's Nexus program is acting as a training ground to teach Google's Motorola division to build best of breed! Google's biggest and most successful partner - Samsung, is an Asian company. Samsung Electronics of South Korea reported today that its quarterly profit  jumped 76%, as its Galaxy smartphones beat rival Apple's iPhone in each quarter of 2012. What many seem to have missed is that EBITDA, Operating and Gross margins all slipped QonQ though. A sign of things to come??? Remember, Google benefits most when the barriers to access information are least. Reference "Cost Shifting Your Way To Prominence Using The Network Effect, Or Google Wins - Apple, RIM & Microsoft Have ALREADY LOST!" as well as my videos below...

 So, let's revisit Glass. Glass is a cool device, but from a hardware perspective, it's not expensive to build once engineered. If the Moto X can be sold for $200, that will likely be the ceiling for Glass, which would probably be sold for less if subsidized by Google. Throw in a half billion dollar ad budget (Glass is already extremely popular and is not advertised or even for sale yet) and you have a definite game changer in the mix.

Imagine if these computer glasses that changes the way we do everything sold for $150, with the full marketing awareness powers of Google behind them. Uh Oh, it's a whole new world.

Glass vs iPhone subsidized

Subscribers, click the following links for my updated price targets on Google (click here to subscribe) and read  Google Q2 2013 Update: Valuing Possibly The Most Powerful Co. In The World?:

The biggest risks to these price points are:

  1. A market that's being levitated by central bank magicians running short on magic spells...
  2. Regulatory pressure, which I feel is quite material and inevitable, but will not be a major factor in the near term.