GDP, M&A, EBITDA, P/E, NASDAQ, Econo-thread Part 12

[Sten Sture]

Thanks!

Here is another little tidbit: US consumer holdings of Real Estate vs Equities

Real Estate: US$14.6T
Equities: US$5.5T

So when Roland's great American housing crash occurs, it will be significant!

[HershOstropoler]

The 42 % for Germany surprises me on the low side, but may be due to the large density centers.

As for "significant", that's a slight understatement. Housing has held up household balance sheets; when the air goes it won't look good.

[Adam Smith]

Maybe not as bad as you think.

How many housing markets ahve bubble pricing? I figure there is about 20% air in the value of our house, but that does not bother me much at all. The air does not affect my mortgage payment or annual solvency, because we bought the house before the prices went up. I don't need the house as an asset until I retire 20 years from now. How many people are in similar situations?

[DanS]

We have had similar suburbia hard corrections in the past which might give us some clues as to what would happen, such as California in the late 80s. I have a feeling that California was more than 20% air, though. Also, I'm guessing that California had higher mobility than the country does now as a whole.

[TCO]

frigging amateur macro-weenies. WE need D2K to run roughshod over you. Boring, shnoring.

(Ming will never check this thread so I am free to misbehave.)

Oh....merry XMas to the fertile Californian, the Austrian gnome, Dutch (ok...Flemish) chocalatier, DC arbitrabiguer, etc.

[Sten Sture]

Have a good lunch tomorrow in the Beltway, many hellos from the left coast. If the baby hasn't made an appearance yet, they will induce tomorrow afternoon, so have a couple of drinks for me.

Cheers!

[TCO]

Please give my best to your wife (not sure if you want her name used on the boards). (Are you all still in the little apartment?) Going to be cozy? how many more?

[Colon™]

Originally posted by DanS
"You're just ducking the question aren't you?"

Well, not really. Or at least mostly not. I'm just hedging my bets because I don't have a clear sense of how Sony approaches it normally. Also, the explanation is perhaps too long for this thread (and it's only a 1/2 formed opinion anyway). But I'll give it a go.

I have a pretty good sense of how Philips does it. Philips appears to use a standard library of in-house functional blocks which are used in concert to create a single integrated circuit that does a specified task. The IC is then sent out to a fab house (demand is probably pooled among several different internal customers). Sometimes Philips creates its own DVD players, etc. with its own ICs--very rarely with others' ICs. Let's assume that Sony goes with this approach on the PS2, and the fab and assembly houses are its own.

Nintendo uses a somewhat similar approach with the Gamecube. Instead of using an in-house functional block library, it rents others' libraries. However, not all functional blocks are available for rent (for instance, I don't think nVidia would allow Nintendo to license its functional blocks). With these functional blocks it then creates three or four ICs to do all of the tasks needed for the entire machine. Send the plans to the fab house (contract) and then assembly (contract?).

Microsoft does business differently. A good portion of the task is completed by generic ICs (and other ICs that are normally used in a PC context), and an operating system that serves as an interface between the hardware and software on a more abstract level than the PS2 and the Gamecube. For instance, the XBox uses a Pentium III 733 MHz CPU--the same one that you buy off the shelf for your PC. A ~ GeForce 4 chipset. DDR memory sticks that you could buy off the shelf.

Microsoft uses none of its own parts. The only hardware it designs is the PCB. The operating system, programming tools, etc. are largely borrowed from Windows XP. All fab and assembly is contract. Microsoft can choose among several different vendors for all of the parts that it buys.

Which of the three approaches makes the most business sense to you?

[NB: There is a fourth, new, way to do it--the soft hardware approach. But none of the three use this approach.]

I don't know about the PS, but Sony isn't zealous about using in-house components. The Vaio laptop is essentially a Toshiba with a Sony brand, a Sony slick design and network features to make it compatible to other Sony devices.

You can't really tell which production approach makes most sense because you don't know the unit costs. Using of-the-shelf components to assemble a console instead of designing them to that purpose might seem sensible but I don't know whether it's as cost-efficient.

Maybe I'm underestimating MS's efforts but I think many firms could design a console like that which means MS still has to rely on superiority in other fields to tilt the balance in its favour.

[Saras]

I neglect the boards for like 4 months and become an "etc." in GP's world. Dang!

[TCO]

Oh...i still lub you. Need a driver?

[HershOstropoler]

AS: We have a cyclical housing market too, that's not the problem. The problem are the people with no downpayments who life on refi and pray for low interest rates, and the lenders who depend on those or questionable insurance for their solvency.

GP: Whatcha mean, "gnome" ? You're one fat Gartenzwerg.

[TCO]

Refers back to the gnomes of Zurich. Isn't Zurich part of Austria? Don't **** with me. I'll ski over and sit on you.

[pchang]

Zurich is in Switzerland

It would be more appropriate to refer to his rank in the Navy - Captain.

[Saras]

The formidable Alpine Navy, as in Sounds of Music?

[HershOstropoler]

It's "mountain navy", you lithuanian saltwater licker.