Reviewing my Big Jambox

About 18 months ago I purchased a Big Jambox. The Big Jambox is a bluetooth speaker with an integrated battery. It is larger than pocketable speakers and gives a much better sound. Now that I have spent a considerable amount of time with it I can highly recommend it to anyone.1

Battery Life – The battery life for this speaker is amazing. Officially it is rated for 15 hours of playback. But, I regularly get more than 17 hours on one charge even when playing the speaker at high volumes.

Design – The Big Jambox is beautifully designed. Mine has the Graphite Hex design. You can also get it in red, white platinum, and white.

Sound Quality – The sound quality of the Big Jambox is superb. It easily sounds as good as any offering by Bose. I have used the Big Jambox in rooms as large as 25′ by 75′ with more than 25 people and it could have handled an even larger space.

Versatile – The speaker has may be paired with any bluetooth device or use a 3.5mm stereo cable, so you can use the speak with just about any device. Being battery powered and bluetooth enabled means you can put the speaker just about anywhere. I frequently bring it with me, whether I am in the house, backyard, or garage. This versatility plus its high sound quality means the speaker can replace much more expensive multi-room speaker setups like Sonos.

Large – It is a little large. And, at 2.71 pounds, it is a little heavy too. What this means is that you really have to make a conscience decision to bring it with you if you go out.

Mesh Grill – The exterior of the speaker is entirely made of a mesh grill, so you will have to be careful to prevent dust and other particles (just hunk about a sandy day at the beach) from getting inside the speaker.

I would highly recommend this speaker to anyone for around the house or portable music playing. At the time of this writing, you can find it at Amazon starting at $190.

  1. The Wirecutter also recommended this speaker as best in its class.

What we wanted Aereo to be

ArsTechnica: Supreme Court puts Aereo out of business1

Aereo, a TV-over-the-Internet startup whose legal battles have been closely watched, has been ruled illegal by the Supreme Court today.

I was disappointed by this ruling. Not so much because I have a legal opinion about the merits of the case, but because I am interested in seeing technological advances that help consumers survive.

For most people we just want an easy way to legally watch our favorite movies and tv shows. The answer seems obvious. Let us watch it online; let us select à la carte the channels we watch. I think we wanted Aereo to be the company that finally beat the the cable/satllite companies and the movie/tv studios, the company that liberated the way we watch our shows. But in the end Aereo couldn’t do it either.2

I suspect that the current regime of cable/satellite operators and the movie/tv studios will never fully adjust to the new model of how we want to watch our shows. They will never relinquish the grasp they have on their content libraries.

The only way our desires to view content in new ways will be satisfied is by firms that produce shows with the expressed purpose of making it available through new platforms.

I’m looking at you Netflix.

  1. I’m a little late writing my thoughts up on this. This story is from 25 June 2014.

  2. It also seemed ridiculous that the success of their business model was predicated on the need to buy a tiny little antenna for each of their customers. This is an example of laws not keeping pace with technology.

Amazon’s Valuation Problem

People always ask, “when will Amazon make a profit?”

Bloomberg: Bezos Alarms Amazon Investors With Spending Pace as Loss Widens
(via Daring Fireball)

Jeff Bezos is testing the patience of investors after Inc. missed analysts’ estimates for a second straight quarter, sending the shares tumbling 11 percent.

The world’s largest online retailer yesterday reported a second-quarter loss of $126 million, more than double what was predicted, even as sales climbed 23 percent to $19.3 billion. Expenses jumped 24 percent to $19.4 billion. […]

The loss in the latest period was the biggest since the third quarter of 2012, when Amazon posted a $274 million loss. Looking ahead, Amazon projected sales of $19.7 billion to $21.5 billion for the current quarter. Operating losses are projected to be $810 million to $410 million, Amazon said.

Amazon gets treated by investors like a brand new start up. A common thought has been that Amazon is a company that is just waiting to flip the switch and can at anytime start to make as much profit as they want. The thought follows that the only reason Amazon is not making a profit now is because they aggressively pour so much money back into the company for new/existing projects.1

As of today Amazon closed at $324.01, down 9.65% today on the bad news listed above. What might justify Amazon’s stock price given the lack of profits?2 Let’s use a simple model to understand what the market is thinking.

The Model
Price = NI / (r -g)

Price = the stock price per share today
NI = the firm’s net income per share one year from now
r = the discount rate
g = the growth rate

Many of you will recognize this as a modified version of the dividend discount model. Instead of dividends I will be using the net income amount. 3 Now all we need to do is estimate the inputs to our model, the net income, discount rate, and growth rate. Stock price is positively related to changes in net income and the growth rate but negatively related to the discount rate. The higher you think the firm’s cash flows or growth rate will be, the more you are willing to pay for it today. If you think the firm will be riskier, as captured by the discount rate, then the price you would be willing to pay decreases.

Scenario #1
Assuming Amazon could achieve Walmart’s profit margin, Amazon would earn just $5.63 per share, their discount rate would be 12%, and the growth rate would be 3%. Using these values Amazon’s stock price should be just $62.56.

Scenario #2
Assuming Amazon could achieve Lululemon’s profit margin, Amazon would earn $26.27 per share, their discount rate would be 12%, and the growth rate would be 3%. Using these values Amazon’s stock price should be just $291.89.

Scenario #3
Assuming Amazon could achieve Apple’s profit margin, Amazon would earn $36.52 per share, their discount rate would be 12%, and the growth rate would be 3%. Using these values Amazon’s stock price should be just $405.78.

Scenario #4
Assuming Amazon’s actual outcome represents some weighted average of the prior scenarios, Amazon would earn between $17.05 and $20.46 per share, their discount rate would be 12%, and the growth rate would be 3%. Using these values Amazon’s stock price should be between $189.44 and $227.33.

Three of the four outcomes indicate that Amazon is overpriced and in most cases by quite a large margin. Delaying the first year of profits only exacerbates the problem. Suppose the best case, scenario #3, is the true outcome, but instead of happening this year we delay it by just one more year; the current price of Amazon’s stock would fall from $405.78 to $362.12. 4

The market is right to be nervous about when/if the profit machine switch can be flipped at Amazon.

How did I arrive at these scenarios?

Estimating Net Income5
Amazon has historically made very little net income. Let’s assume Amazon can flip the switch from no profits to some amount of profits. I have three comparable companies off which to generate Amazon’s hypothetical post switch flip net income. These three com parables will establish upper and lower bounds on Amazon’s potential profitability.

Walmart – Amazon is a large retailer selling many low margin products that compete with Walmart. Amazon is on the record as saying they would like to be the largest retailer in the world. If they could take that crown, isn’t it reasonable to expect their margins to be similar to the current largest retailer? Walmart has $146.74 of revenue per share with earnings per share of just $4.84. Walmart’s profit margin is just 3.3%. If Amazon had a profit margin of 3.3% their net income would have been $5.63 per share.

Lululemon – Perhaps using Walmart is not appropriate since Amazon does sell a larger variety of high priced items than Walmart ever will. Perhaps using a high margin retail like Lululemon is more appropriate. Lululemon’s profit margin is much higher at 15.41%. If Amazon had a profit margin this high their net income would have been $26.27 per share.

Apple – Amazon is following Apple’s lead in many respects. Amazon has steadily increased the amount of virtual goods they sell. They have an ebook store, music downloads, video streaming among other services. Amazon develops their own flavor of Android and now sells a phone and a tablet device. This certainly starts to feel a little more like Apple.6 Apple, who is the poster child for high margins and solid profits has a profit margin of 21.42%. Given this high profit margin, Amazon’s net income per share would have been $36.52.

I personally tend to think that Amazon’s profit margin, should the flip the switch would be closer to 10%-12%. This opinion is based on the average profit margin that I think would be generated by Amazon’s different units. This would put their net income between $17.05 and $20.46 per share.

Estimating the discount rate
The discount rate is the rate that converts future cash flows to present cash flows. The rate is a function of the real rate of return, an inflation premium, and a risk premium. We can estimate Amazon’s discount rate using a naive approach, setting the rate at or near the historical market discount rate of 12%. Using the Capital Asset Pricing Model (CAPM) to derive the discount rate. The with Amazon’s beta of 0.77, the CAPM indicates their discount rate is about 10%.

Estimating the growth rate
This growth rate represents the long run growth rate of the company’s earnings. The historical growth rate of the overall economy is approximately 3%; this makes for a very reasonable assumption as it is unlikely that a firm can forever grow faster than the economy as a whole.

  1. Occasionally in casual conversations I ask people how old they think Amazon is… it’s ok if you don’t know. Amazon was founded in 1994 and became a public company in 1997. We are talking about a 20 year old firm here that has yet to make any significant profit.

  2. Remember that the price alone of a stock means nothing. Share price must be given context. This is why price to earnings ratios are so frequently cited. They give context to an otherwise abstract number.

  3. I choose net income because not all firms pay dividends and, with a couple of assumptions, paying out dividends is irrelevant to the value of a firm. Some might argue that I should use free cash flow; given the simplicity of the model the choice between net income and free cash flow is not highly impactful.

  4. This calculation is performed by discounting the price by one year which is done by dividing the price by 1 plus the discount rate.

  5. Revenue, earnings, and profit margin amounts in this section represent totals from the trailing twelve months. Earnings are diluted earnings per share.

  6. although Amazon sell these devices and offers some of these services as a way to entice users to spend more on products through; Amazon’s devices are sold at near to break-even prices counting on this fact

That time we almost blew up the Moon

Every once in a while we have the craziest ideas…

That time we almost blew up the Moon

President John F. Kennedy’s speech at Rice Stadium is the stuff of legends. In an impassioned address lasting only about seventeen minutes, the young president laid out a powerful emotional argument to the American public on exactly why so much money was being spent to send humans to the Moon:

But why, some say, the Moon? Why choose this as our goal? And they may well ask why climb the highest mountain? Why, 35 years ago, fly the Atlantic? Why does Rice play Texas?We choose to go to the Moon. We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.

But that goal of landing on the Moon wasn’t the first mission chosen to “measure the best of our energies and skills.” When the USSR launched Sputnik in 1957, the beeping satellite carried a clear message from the Soviet Union to the rest of the world, especially to America: “We, not you, control the high ground.”

As the USA invested money, time, and effort into its own rocketry programs in response and kicked off the Space Race, all kinds of ideas on how to regain that high ground were considered. One plan, codified in a report with the innocuous title “A Study of Lunar Research Flights,” examined the potential effects of the United States detonating a nuclear warhead on the Moon’s surface as a show of military superiority.

The project had a high number of unknowns, not the least of which was whether or not the warhead could be lobbed accurately at the Moon without missing and returning to Earth. Also not known was whether or not the warhead’s detonation would incidentally create enough radioactive fallout to deter future human landing on the Moon. The project was fortunately abandoned in 1959, and the Moon remains nuke-free.

In a humorous postscript, it’s worth mentioning that Kennedy’s Rice speech actually works just as well if one replaces each instance of “go to the Moon” with “blow up the Moon.” Seriously, try it.

via Apollo 11 turns 45: A lunar landing anniversary retrospective | Ars Technica.

Linking to a specific spot on a long webpage

It seems like long form articles and webpages are becoming more popular. I frequently want to send someone a link to one of these long pages but I don’t want to make them scroll all the way down to find the specific part of the page I want them to see.

The following video contains simple instructions on how to send a link to a specific part of a longer webpage.

Interpreting soldered RAM

Other World Computing: Teardown of Lower-Cost 2014 iMac Reveals Soldered Memory

Now that we’ve had time to teardown the new iMac, unlike the $1,299 iMac, we found this iMac has the memory is soldered to the motherboard removing any possibility of adding additional memory. Users will be permanently locked in to the 8GB of memory, as there is no Apple factory upgrade option.

Much has been made about Apple’s steady march toward making their devices more difficult to upgrade. The people that do tear downs are usually companies that have some sort of interest in selling upgrades, parts, or kits for do-it-yourself or do-it-for-me consumers. So, they are dependent upon Apple devices being upgradable, but on what does Apple depend?

Apple depends on a very well-know cycle. Consumers buy Apple hardware. Consumers enjoy Apple software, hardware, and (now) services. Consumers buy more Apple hardware. It is crucial that Apple make their hardware powerful enough to create a high quality user experience. If consumers do not like the experience they will not return for more Apple hardware. How do we interpret Apple’s decision to make it ever more difficult to upgrade their hardware?

I think you don’t need to look any further than the direction Apple software is taking. Look at the features that were introduced in OSX 10.9 Mavericks. Compressed memory was a much welcomed addition.1 This feature allows the operating system to compress the contents of RAM that are not in active use thus providing needed headroom for applications that need more RAM. I haven’t made it all the way through OSX 10.10 Yosemite documentation yet, but it seems to me like Swift fills in some of that role.

Apple is soldering the RAM in place because they believe eight gigabytes will be sufficient for most users over the life of the machine. They can forecast this because they control the software and they know the future product roadmap. Look for Apple to continue to find ways to squeeze out more performance, even from less than stellar hardware.

  1. It occurs to me that this link is likely to be broken once OSX 10.10 Yosemite is released. Maybe we should be complaining to Apple about having better permalinks?

I was promised flying cars

New York Times: I Was Promised Flying Cars

The first is gravity, the force that keeps your feet on the ground. The second is electromagnetism, which is responsible for anything involving light or the arrangement of atoms. The third is the strong nuclear force, which binds protons and neutrons together inside every atom. And the fourth is the weak nuclear force, which (among other things) helps guide the fusion reactions that power stars.

And that’s it. Just four forces, just four ways to make things happen.

For all the power of modern science, we are masters of only one of these forces: electromagnetism. Laptops, smartphones, wirelessly connected thermostats, Google Glass — all our high-tech miracles exist because we’ve learned to control the electromagnetic force at the subtlest of levels.

We do indeed have many things that even a short time ago would have been considered impossible. I wonder how many inventions lie in wait for the understanding of one of these other forces of nature. Maybe everything isn’t as impossible as it seems.

It seems to me that the trouble we have with harnessing the other three forces of nature is most related to our inability to measure them. We are wizards with electromagnetism because we can very acutely measure what is happening. We don’t have so much skill with the other forces.

ArsTechnica: Gravity’s strength still an open question after latest measurement

You might expect that, all these years after Newton, we might have a good measure of his gravitational constant, G. As the authors of a new paper on the topic note, there are plenty of reasons to want a good measure of G “given the relevance of the gravitational constant in several fields ranging from cosmology to particle physics, and in the absence of a complete theory linking gravity to other forces.”

Yet most of our measurements of G come from an updated version of a device designed by Henry Cavendish back in the 1700s. And rather annoyingly, these measurements don’t agree with each other—they’re all close to a single value, but their error bars don’t consistently overlap. Now, researchers have made a new measurement of G using a method that certainly wasn’t available in the 1700s: interference between clouds of ultracold atoms. And the value that they have come up with doesn’t agree with many of the other measurements, either.

Better measurements will be the key to unlocking the potential of the other forces.1 That’s why we should be excited about advances in measurement technology even if they do not have immediate practical applications, like recent improvements to atomic clocks. The new NIST-F2 atomic clock is three times as accurate as the clock it replaces; the new clock is accurate within 1 second over 300 million years. Obviously we don’t need that kind of accuracy for most daily activities. But the thing about new technology is that it isn’t always clear ahead of time how it might be used. A New Era for Atomic Clocks

Improved atomic clocks obviously will benefit widely used technologies that have long relied on precision timekeeping, such as communications and GPS positioning. But the new atomic clocks are becoming so extraordinarily precise that they are likely also to be used as extremely sensitive detectors for many things besides time.

For example, the frequency (“ticking rate”) of atomic clocks is altered slightly by gravity, magnetic fields, electrical fields, force, motion, temperature and other phenomena. In today’s conventional atomic clocks, those frequency changes are errors to be tightly controlled. In next-generation atomic clocks, the frequency changes are measured to such a fine degree that the clocks could become world-class instruments for measuring gravity, magnetic and electrical fields, force, motion, temperature and many other quantities.


  1. Just like being able to measure a goal or performance on a project is the key to improving it.

“All Our Patent Are Belong To You”

Tesla is opening up the use of their technology.

Tesla Motors was created to accelerate the advent of sustainable transport. If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal. Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.

This decision is huge for opponents of the current patent system. Frequently we hear, even from some of the biggest corporations, that the patent system is broken and it needs to be reformed.1 It is usually hard to believe someone until they, as the cliché goes, put their money where their mouth is. That is exactly what Tesla is doing. They are showing yes they think the patent system doesn’t work and they can still survive without stifling or attacking their competitors.

In fact, Tesla’s problem is lack of competition.

At best, the large automakers are producing electric cars with limited range in limited volume. Some produce no zero emission cars at all.

Remember that Tesla is trying to build more than a car. They are trying to build a ecosystem or a “platform”.

We believe that Tesla, other companies making electric cars, and the world would all benefit from a common, rapidly-evolving technology platform.

Besides, Tesla’s biggest problem isn’t its technology or its competitors. Tesla’s biggest problem is gaining mindshare. Tesla needs other people to bang the electric vehicle drum.

  1. For example, Apple and Google have agreed to play nice and seek reform. The question still remains if we believe them.

Another win for sanity: FIFA to use goal-line tech at the World Cup


Thursday’s opening match between Croatia and Brazil will be the first-ever World Cup game to be equipped with goal-line technology, designed to quickly and definitively determine whether a ball crossed over the line. Since the last World Cup, organizers have been testing the technology at lower-level tournaments and events.

It’s about time. As the article points out, England’s non-goal versus Germany in the last world cup was ridiculous. Hockey, tennis, cricket, and other sports use similar technology. This should be a real positive for the tournament and remove some of the controversy so fans can focus on the games.