I noticed you installed them a few months back. A few weeks ago, out of curiousity, I tried it.

It was just that: a curiousity. My experience went as follows:

1. I was reminded of my first job as a checkout operator, which I utterly detested. It was with your company, actually, at the Big W in Darwin. Your managers there were incompetent and mean-spirited. I guess they got promoted to head office. I do not see doing a job I hate for free as progress.
2. I am out of practice. A normal checkout operator is much faster and has a good idea of efficiently packing the bags.
3. You still needed someone to verify my credit card signature. This took longer than it would at a normal checkout. No, I will not use a credit card PIN. I happen to like the additional legal protection the signature gives me.

So basically you want me to provide free labour, waste more of my own time and get crappy service from a grumpy curmudgeon (me). No bloody thanks.

It’s obvious you’re really keen on these machines. Today you closed the express checkouts so that I would either have to queue up with the trolleys or go through your stupid, rubbish, useless, dodgy, crappy, dumb, time-wasting, moronic, transparently grasping self-serve aisles. I chose to queue with the trolleys.

I noticed today that your competitors at Coles haven’t installed these machines. Indeed their express checkouts were fully staffed. And so, from now on, I will refuse to purchase my groceries at Woolies. I will be buying my petrol at Shell. I will be avoiding Dan Murphy’s and Dick Smith.

You, the Board and Executives of Woolworths, are a pack of wankers. I hope to see you resigning or being sacked with no bonuses. Thereafter I will look forward to the news that you are all rotting in a special hell where you are required to torture yourselves.

Yours Sincerely,

An ex-customer.

I am quite excited about this. I spend a lot on books shipped via Amazon. The Kindle means that I would spend less per book and eliminate shipping costs.

Edit: Though it looks like they’re only going to sell the plain Kindle, not the enlarged DX variant. Fooey.

Edit 2: You need to order at this page in order to get it shipped to Australia.

For example, Hartigan has defended traditional media reporting and newsroom methods; bloggers say that News Ltd don’t “get it”, or are already giving in, or their content sucks, or some combination of these.

As I pointed out about a month ago, what the content-producers for News Ltd and bloggers do is a total sideshow. This purely tribal confrontation between hacks, flacks and new jacks is just that: tribal. The internet is strangling News Ltd’s money supply, which is what counts.

It’s a mistake so common that even wise economists are missing the money.

News Ltd — ignoring the movies, music and games parts — is not a media company. They manufacture and sell advertising and classifieds inventory. That’s their core, actual business. That inventory is manufactured by journalists churning out the stuff which fills the gaps between the inventory and convinces the general public to pick it up. The problem for News Ltd isn’t that bloggers are somehow magically better at doing that, it’s that due to the internet there are no more expensive barriers to entering the advertising inventory market.

A similar mistake people make is thinking that Google is a technology company. They are not. Google’s real business is manufacturing and selling advertising inventory. Sound familiar? It should, because that’s the business News Ltd are in. On the surface these companies are chalk & cheese: one is a traditional media conglomerate with roots going back generations; the other is an upstart firm that sprung to world prominence with a vastly superior search engine offering.

But the thing that makes them money — the thing that people actually pay them to do — is to manufacture and sell advertising inventory.

Companies are usually categorised by what they market or what they spend R&D money on. This is just silly: just as economists care more about people actually do rather than what they say they will do, we should categorise companies by what people pay them for, not what they started off doing or what turns up in their marketing material.

If the term’s not taken, we could call this Revealed Industry, analogously to the concept of Revealed Preference. The revealed industry of both News Ltd and Google is selling advertising inventory. All else is, I regret to say, mere fluff. And right now Google is cleaning News Ltd’s clock. The horse has bolted from the barn, and all News Ltd and its critics seem to care about is arguing about the colour of the barn walls.

Disclosure: I was a classifieds department employee at a small News Ltd newspaper for 3 years.

Cubicles are one of worst false economies created by bean-counting. Managerial types seem to thrive on interruption. They love a crisis in which they can prove that they are as good as Captain Hornblower.

However it’s been known for a long time that cubicles are dreadful for productivity, particular in businesses where attention to abstract detail is important. Such as, I don’t know, banking.

Still, it could be worse. He could decide to introduce hot-desking.

The truth has little to do with quality, reporting or bloggers. It’s all about money.

You see, a newspaper has three sources of income:

1. Circulation: this is the cover price you pay, or the subscription you bought.
2. Advertising: these are the big, splashy boxes in the body of the newspaper.
3. Classifieds: these are the tiny, densely packed text ads at the back of the newspaper.

If you ask most people how a newspaper makes its money, most would tell you circulation, many would tell you advertising, and some would mention classifieds.

But the order is actually backwards. In most papers, classifieds are the biggest earner, followed by advertising, followed by circulation. In fact, for many papers, the cover price doesn’t fully cover printing and distribution. All the journalistic institutions of the 20th century were subsidised not by readers, but by the “rivers of gold” — the regular flow of classified ads, lodged week in, week out with nary an interruption.

But the rivers of gold are drying up. In the USA, the free classifieds website Craigslist is busily sucking the money out of the local markets newspapers have traditionally relied on. And although the big newspapers and conglomerates have online versions of classifieds, it’s much harder to enjoy the kind of exclusivity they used to get in most towns. To start a daily newspaper takes years and costs millions of dollars, and is very risky into the bargain. To start a website costs perhaps $20 and a bit of time installing software. The barriers to competition are very low.

Advertising is losing its punch too. Newspapers have tried to import the “display advertising” model into the online space, with limited success. Again, the problem is that anyone can set up a website and sell advertising space. This space — called “inventory” by the industry — is expanding extremely rapidly. It has expanded more rapidly than the number of people online. At the same time, demand for all forms of advertising is slumping. The iron laws of supply and demand are driving down the money that can be earned from online advertising, and it simply cannot replace the profitability of print advertising.

In some ways, circulation is unimportant. A newspaper that isn’t printed is a smaller loss to make up. But of course advertisers and classifieds customers rely on circulation to get their value for money. This is one area where free alternatives, like bloggers, does affect the long term shape of the industry — by gutting circulation, it makes newspapers less attractive than free or cheaper online alternatives.

It’s all about money, folks. The newspaper business has had more than a century of stable income. That period is suddenly coming to an end. The invisible hand is slapping the newspaper business, and slapping it hard.

Where to from here? Some newspapers are reportedly planning to simultaneously introduce ‘paywalls’ to their content. Online distribution of content is expensive, but nowhere near as expensive as physically printing and distributing newspapers — you might say that the haulage on photons and electrons is cheaper than the haulage on atoms.

So, the reasoning goes, if you charge a low price for access to the content, then circulation could take up the slack because it would be profitable in itself.

But they’ve already sussed out the problem with this model: you need to form a cartel for it to work. Putting aside the legal niceties of antitrust and competition laws, there’s the plain economics of the matter. If any one reputable newspaper or group breaks ranks, they will clean up the “eyeballs” and so be able to earn more. Cartels do sometimes succeed, but usually don’t because of the incentive to cheat. And with everyone in a panicky mood, how long would it take for somebody to break ranks?

So there you have it: a quick summary of why newspapers are withering.

Disclosure: Before moving to Perth, I was employed as a classifieds salesperson. I am also working on a startup which I hope will upend this dreary economic situation. I have a truly marvelous scheme which this margin is too narrow to describe (and may be looking for investors and directors soon).

The truth has little to do with quality, reporting or bloggers. It’s all about money.

You see, a newspaper has three sources of income:

1. Circulation: this is the cover price you pay, or the subscription you bought.
2. Advertising: these are the big, splashy boxes in the body of the newspaper.
3. Classifieds: these are the tiny, densely packed text ads at the back of the newspaper.

If you ask most people how a newspaper makes its money, most would tell you circulation, many would tell you advertising, and some would mention classifieds.

But the order is actually backwards. In most papers, classifieds are the biggest earner, followed by advertising, followed by circulation. In fact, for many papers, the cover price doesn’t fully cover printing and distribution. All the journalistic institutions of the 20th century were subsidised not by readers, but by the “rivers of gold” — the regular flow of classified ads, lodged week in, week out with nary an interruption.

But the rivers of gold are drying up. In the USA, the free classifieds website Craigslist is busily sucking the money out of the local markets newspapers have traditionally relied on. And although the big newspapers and conglomerates have online versions of classifieds, it’s much harder to enjoy the kind of exclusivity they used to get in most towns. To start a daily newspaper takes years and costs millions of dollars, and is very risky into the bargain. To start a website costs perhaps $20 and a bit of time installing software. The barriers to competition are very low.

Advertising is losing its punch too. Newspapers have tried to import the “display advertising” model into the online space, with limited success. Again, the problem is that anyone can set up a website and sell advertising space. This space — called “inventory” by the industry — is expanding extremely rapidly. It has expanded more rapidly than the number of people online. At the same time, demand for all forms of advertising is slumping. The iron laws of supply and demand are driving down the money that can be earned from online advertising, and it simply cannot replace the profitability of print advertising.

In some ways, circulation is unimportant. A newspaper that isn’t printed is a smaller loss to make up. But of course advertisers and classifieds customers rely on circulation to get their value for money. This is one area where free alternatives, like bloggers, does affect the long term shape of the industry — by gutting circulation, it makes newspapers less attractive than free or cheaper online alternatives.

It’s all about money, folks. The newspaper business has had more than a century of stable income. That period is suddenly coming to an end. The invisible hand is slapping the newspaper business, and slapping it hard.

Where to from here? Some newspapers are reportedly planning to simultaneously introduce ‘paywalls’ to their content. Online distribution of content is expensive, but nowhere near as expensive as physically printing and distributing newspapers — you might say that the haulage on photons and electrons is cheaper than the haulage on atoms.

So, the reasoning goes, if you charge a low price for access to the content, then circulation could take up the slack because it would be profitable in itself.

But they’ve already sussed out the problem with this model: you need to form a cartel for it to work. Putting aside the legal niceties of antitrust and competition laws, there’s the plain economics of the matter. If any one reputable newspaper or group breaks ranks, they will clean up the “eyeballs” and so be able to earn more. Cartels do sometimes succeed, but usually don’t because of the incentive to cheat. And with everyone in a panicky mood, how long would it take for somebody to break ranks?

So there you have it: a quick summary of why newspapers are withering.

Disclosure: Before moving to Perth, I was employed as a classifieds salesperson. I am also working on a startup which I hope will upend this dreary economic situation. I have a truly marvelous scheme which this margin is too narrow to describe (and may be looking for investors and directors soon).

Of course the greeks had it wrong. The Oracle had knowledge; that made it a local power. Apollo received lip service, Delphi received pilgrims and gifts.

Echoes of greece have just taken place in the IT world. Database company Oracle have bought hardware and software company Sun. It’s the most important such event in quite a while and will make a big dent in the IT business landscape for the next decade or so.

My lame punditocratic take on this event below the fold.

The Background

The background to this is that Sun has been hit hard by the financial crisis. A substantial amount of their money was made in selling to big Wall Street firms and banks; that revenue stream suddenly stopped last year. Their sales force has been notorious for not wanting to sell a) their technological forays into cheaper servers or b) to any customer with less than 50,000 employees. Which hasn’t helped them at all.

A few months ago word came that Sun was in talks with IBM about a buyout. There was nothing Sun had that IBM could possibly need except for Sun’s customers. Sun held about 28% of the highend server market to IBM’s 38% share. Adding Sun’s customers to IBM would let IBM fight off Dell and HP with crushing numbers. As a bonus, IBM has heartily embraced Sun-owned programming language Java; having it come inhouse would be a nice bonus.

But otherwise, that deal was riddled with expensive redundancies. Every item in the Sun technology portfolio has a competitor – sometimes several – in the IBM portfolio. Sun has servers, IBM has servers. Sun has mainframes, IBM has mainframes. Sun has a Unix, IBM has a Unix. Sun has storage systems, IBM has storage systems. Sun has network gear, IBM has network gear. Sun has a database, IBM has a (much better) database. Sun has a Java stack, IBM has a Java stack. The overlaps go on and on. Once IBM had acquired Sun, it would spend the next decade migrating its new customers from Sun technology to IBM technology. Sun’s stuff would be left to wither, pure deadweight that came along with the customer base.

This would probably explain why IBM was playing hardball in negotiations. With Sun’s vulnerable position and the amount of technologies that they would inevitably kill off, IBM placed a lot of pressure on the Sun board to accept a “low ball” deal of around $6.5 billion for the company. Then, a few weeks ago, they walked away from the deal, apparently as a negotiating tactic.

Then, a few days ago, Oracle and Sun announced that Oracle had offered to buy Sun for $7.4 billion.

Why Oracle? Why Sun?

Oracle and Sun have a long history. Oracle was the first company to commercialise a Relational Database Management System, also called Oracle. Interestingly the background theory and prototype work for relational databases was actually carried out by IBM researchers. But the relational model for databases was incompatible with the network-model and hierarchical-model databases that IBM already sold to customers. It took outsiders to see the commercial potential. Oracle has grown to be massively profitable since then.

Sun was also an upstart. They began with “cheap”, powerful workstations for engineers, scientists, architects and the like, by combining the Unix operating system with mass-manufactured components. As time went on they maintained a commitment to R&D, including the development of their own CPU architecture (SPARC), more of which below. Eventually Sun grew into a successful major player in the Unix server market, which had already hollowed out much of IBM’s mainframe business from beneath.

Throughout this time, it was essentially “the done thing” for Oracle databases to be run on Sun’s Unix (SunOS, later called Solaris) on Sun’s hardware. Solaris on SPARC became the primary development target for Oracle and the two companies frequently cooperated to ensure a smooth, performant fit between the database, the operating system and the hardware.

So in some ways, the merger is obvious; the business fortunes of Sun and Oracle have been closely intertwined for decades. On the other hand, it came as a shock to many quarters, because here is Oracle, a pure software company, buying a mixed hardware/software company.

Reasons to buy Sun: the software

Oracle has very little duplication with Sun and they already have an overlapping customer base. This implies that they bought Sun for its technology portfolio and IP.

Some have suggested that it was purely for Sun’s formidable patent portfolio. This could be the case, but it would be much cheaper to simply license it. Sun would probably jump at an offer of one or two billion dollars for a long-term license deal, which would have been cheaper for Oracle. So they wanted something more.

Others have suggested that it’s a move to kill MySQL, a popular opensource database which belongs to Sun. But Oracle already owns the best bits of MySQL (the InnoDB engine) and besides, there’s currently no overlap between the high-end Oracle segment and the low-end MySQL segment. High-end customers wouldn’t trust MySQL, which has a terrible reputation amongst serious database nerds, and MySQL users are hardly likely to be suddenly seized of the need to buy $10,000 Oracle licenses. My guess is that MySQL is a kind of bonus for Oracle.

Are they buying the operating system, Solaris? Quite possibly. In the last few years Oracle have aggressively tried to move into the Linux operating system market, cognisant that Linux has been hollowing out the market of classic Unix vendors like Sun and that Oracle needed to be where the customers were. Oracle have a Linux variant of their own that they support, and Oracle programmers are among the most active contributors to the Linux project generally.

On the other hand, Oracle is still superbly adapted to the Solaris operating system. As a bonus, Solaris ships with technologies that have no Linux equivalent: in particular the Zettabyte File System (ZFS) and the DTrace debugging and inspection tool. ZFS and DTrace are exceptionally complimentary to Oracle’s core product; so much so that Oracle has been for some time leading and contributing to a ZFS-like project (The B-tree File System). So there’s evidence that Oracle have desired an operating system to call their own, and Solaris is an even better fit than Linux.

What about Java? This is a programming language originally developed by Sun for use in consumer devices, then marketed as a way to add programming to webpages, which finally found a home in “enterprise” computing. Java has been adopted very widely, including large investments by IBM and Oracle.

Java is an open source language these days, minus some caveats about the trademark itself. Several companies own “full stacks”. Sun had theirs, IBM had another one and Oracle through acquisitions had a third one. This is an area of duplication, so Oracle will likely mix and match their portfolio with Sun’s and dump some of the overlapping technologies.

It may be that owning Java is a ploy to gain leverage on IBM, or to put the hurt on them in some way. I’m not precisely sure how. IBM already own a complete, independent set of Java code and libraries. The licensing terms on Java are such that Oracle couldn’t really kill off competitors even if it wanted to. There’s some marketing cachet in owning Java, but I suspect that the cachet of being Oracle was enough already.

Reasons to buy Sun: the Hardware

Sun design and manufacture a lot of really cool hardware. They sell thin clients, low end servers, high end servers, mainframe-class servers, automated tape libraries, SANs, network switches and so on and so forth. Essentially you can, in theory, completely fit out your company with Sun gear without having to go to another vendor.

Of particular interest to Oracle is Sun’s T1 and T2 servers. These are built around a SPARC processor line called Niagara.

Niagara was a pretty bold break when it was announced. Instead of focusing on maximising inline performance, Sun set out to build a chip that could juggle a very large number of tasks with a relatively small amount of electricity. It was an extremely forward looking design: database and web server loads continue to climb and so does the cost of electricity.

Oracle contributed input to the design of the Niagara family and to its overdue successor, the Rock. These chips are extremely well suited to database workloads. A typical Oracle installation does a lot of transaction processing — keeping and updating records. Much of the information for these systems arrives simultaneously but affects different records. Consider a credit card company: many credit cards are getting swiped at any one moment, but each swipe only touches one card and one company at a time.

The design of the Niagara is such that each chip can keep working on a lot of such tasks simultaneously at a fast-enough pace, rather than trying to do one task at a time very quickly. The side effect of this simplify-and-replicate approach is that electricity use is driven right down for the same amount of database work.

But surely, Oracle is a software company …

There’s been wide speculation that Oracle will sell the hardware parts of Sun and keep the software. This comes from the business-school idea that companies should “stick to their knitting”.

The problem with the idea of sticking to knitting is that it just hides the question: what knitting? What’s the knitting scope? What is in the knitting and what isn’t?

So the traditional stick-to-knitting approach is to say “Oracle is a software company, they don’t sell hardware; ergo they will sell the hardware to IBM, HP or Sun’s former hardware partner Fujitsu”.

But suppose that Oracle isn’t in the software business. What if their knitting is “what our customers want from us”. Radical, I know!

Because one of the consequential ideas of sticking to knitting is that companies should jettison or outsource anything that doesn’t relate to their core business. Most companies don’t view establishing, running and updating IT systems as their core business, so the natural move is to pay someone else to do it for you. And nothing seems more attractive than to buy everything you need from the same shop.

Right now, only IBM own everything you could possibly want. They can build the entire network, they have all the software you need, and sell everything from laptops to desktops to servers to mainframes. It is possible to go to IBM with a fat chequebook and say “you handle all of it”.

Once the Oracle/Sun deal is complete, Oracle will be able to do the same thing. They will have the database, the business apps (which they’ve been acquiring for years) and now the hardware too. Right now Oracle can lose database sales to IBM’s own DB/2 product when big customers decide they want a single IT supplier. But now they’ll be able to chase the single-vendor business segment, which is growing. In fact they’ll have slightly more than IBM does, through the ownership of Sun’s Open Office suite.

So in fact, Oracle has an excellent incentive to retain the hardware business in order to defend and expand their existing portfolio, by becoming a single-source vendor for all things IT. This places them on a level playing field with IBM, who don’t seem to be suffering at all from being a most un-MBA-like IT conglomerate.

Afterword

I could be wrong. This merger is acting as a kind of Rorschach test for pundits. Everyone sees in it their favourite strategy or technology, because between them Oracle and Sun pretty much cover the whole spectrum of big-company IT. Do you think thin clients are the future? Then you see Oracle pushing the SunRay platform and dumping the servers. Do you think multi-core is the one true way? Then this acquisition is about Niagara and that its future is assured. Fan of strategic shennanigans? Then the acquisition is about hurting IBM on Java and the hardware parts of Sun are toast. Linux fan? You predict Solaris will be GPL’d and its tastiest morsels absorbed by the Linux kernel. Not a Linux fan? This is a sign that opensource is a dead end in terms of business strategy.

Right now we simply don’t know what Oracle is going to do. We won’t know until the deal is settled. But it certainly gives us grist for the mill for the next few months.

Update: I was right about SPARC. Larry Ellison says they’ll be keeping it; possibly adding features to improve database performance.

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Today I spent some time getting down to the nuts and holts of payment systems.

I’ve done some work on this before, of course. Westpac knocked me back for their ordinary merchant account. I began to look further into third-party payment services. I have concluded that Australia is a terrible country for entrepreneurs who aren’t doing something ordinary.

To recap, these are my requirements from a merchant or payments facility:

It must:

1. Allow me to bank with an Australian bank
2. Provide multi-currency support. I need to be able to charge an amount in a currency and hold it in that currency — ie, it can’t be billed in USD and received in AUD. It has to be billed in USD, held in USD, then payed out in USD.
3. Have some method of recurring billing where I do not hold credit card details.

I was chatting about this with other University Computer Club members today. Turns one of them is working on his own startup project (link removed by request) and has been facing many of the same problems as I have. His research found that for multi-currency support, you have to bank with NAB. Other banks let you run foreign currency accounts but won’t accept foreign currency credit card payments, which is one of my requirements. Apparently NAB will allow you to accept foreign currency payments and hold them in the original currency.

Apparently it requires a lot of harassing of NAB staff to make progress.

Then there are the fees.

NAB presumably realise that they’re the only one in this market. It’s $1200 to set up the account (vs $330 for Westpac’s AUD merchant facilities), plus various annual, monthly and transaction fees. On top of that you’ll want to use a payment gateway for the additional services they provide (like recurring billing), incurring additional fees.

For whatever reason, NAB don’t include foreign currency accounts in their online banking scheme. Unless you want to visit the bank in person to get a statement, and then type in all transactions into your accounting system manually, you’ll need to get a Windows PC with a modem to dial in to a special 1901 number instead. This is such bad service it makes my head hurt.

My fellow UCCer has said he is now seriously considering incorporating in Delaware. Opening and managing a US bank account may be cheaper and easier than doing it here in Australia. I guess I might have to do the same.

Anybody got tips on incorporating overseas? I’ve only just learned how to do it in Australia, after all.

Update: Inquiries at startup discussion site Hacker News have yielded more suggestions, including opening a bank account in Canada (the theory is that it’s a Commonwealth country but also next door to the USA) and also some advice that HSBC may offer what I need in Australia.

Update 2: HSBC don’t offer merchant services!

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I’ve been divided on how to manage server risks: what happens if one of my servers fails? In the early phases I’ve generally decided that this is a risk I will take on. My US provider (Slicehost) is reliable and quite capable. A search for “slicehost sucks” doesn’t turn up too many hits compared to some other firms. Slicehost manages various risks for me: power supply, fire, hardware failure, network disconnection. That’s what I pay them for, and they’re much better at it than I am.

But a few days ago the FBI swept into a Dallas data centre and took everything. And I do mean everything — every server, regardless of whose it was or what it was doing. The FBI have been known to seize individual servers or a handful here and there as part of investigations. They’ve built a rotten reputation for sitting on seized hardware for years and needing constant prodding and harassing to return it. Generally, the thinking goes, if the FBI take your stuff, you might as well write it off. It’s as good as gone.

The general way to manage FBI risk has been to prevent your server from being used for illegal purposes. Keep your server secure, keep the patches up to date, occasionally audit it, use security tools etc etc. If bad guys don’t start using your server, the FBI won’t track it down and take it.

But this is a new class of FBI risk. Now, my risk is based on the security of every server in the same data centre, which is something I cannot control. A commercial data centre could easily contain thousands of servers. A VPS provider like Slicehost could be running tens of thousands of virtual servers in a single centre. It is essentially a certainty that someone in that group has been cracked and has unwittingly started to serve illegal content.

Now I have to worry about dispersing my system across multiple data centres much, much sooner than I had planned to. Thanks a lot, FBI. You’ve basically added hours of work and a lot of extra expense to the plate of anyone who hosts servers in the USA.

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