Sunday, March 8, 2015

Đằng Sau Việc FBI Đóng Cửa "Con Đường Tơ Lụa"

Druglord, Genius, or Saint? What Kind of Man, Really, Is Silk Road’s Dread Pirate Roberts?
As many of you must know, the US government (and I’m not certain of all the agencies involved) has charged a young man named Ross Ulbricht with being “Dread Pirate Roberts” (DPR), the “drug kingpin” behind the Silk Road online bazaar. You probably do not know, however, that he goes on trial in two months.
I also suspect that many of you saw the government’s well-publicized hit man allegations. Supposedly Mr. Ulbricht was into murder for hire. Funny thing, though—those allegations evaporated by the time formal charges had to be filed. It makes you wonder whether those allegations were always strictly for show (read “character assassination”). It made me wonder, at least.
Adding another turn, it seems pretty clear that the FBI flatly lied about its evidence. As I read it, this supposed evidence should be inadmissible.
So, we have a big trial coming in January, minus the murder charges that were so well publicized, and probably involving fabricated evidence.
On the other hand, we have Chucky Schumer (senator from New York, where this trial will take place) standing behind it all. So you have to wonder how much political clout has been dedicated to a conviction. But even so, if a jury is involved, even senatorial power doesn’t lock in the desired result.
So, this shapes up to be very interesting. Through it all, however, one question stands unanswered:
What Kind of Man Is This Dread Pirate Roberts? First of all, we don’t really know that Ross Ulbricht was DPR. We’ll have to see what happens at the trial on that question. But whether Ross is or isn’t, who is this person? He took his name from the cult classic film The Princess Bride, but that only tells us that DPR has a sense of humor.
While I never used Silk Road myself, I do have contacts who did, so I asked them about DPR. Here’s what I received:
I read everything he wrote from the first month onward … He was really quite a model citizen, and described the meaning of his actions anytime he was making a change or implementing a new policy. He said we were doing this to honor the part of ourselves shared by every hero of the past who fought, and sometimes died to protect liberty. Started a book club where people read and discussed Mises, Rothbard, etc. He took a very laissez faire approach.
The archive of the Silk Road forum seems to be gone, but quite a few of DPR’s posts were collected and published by Andy Greenberg at Forbes. Here are some of the man’s thoughts:
On DPR’s Book Club:
I started this club because I think the pursuit of truth is one of the most noble human endeavors. Debating these issues is critical for us to construct a world-view that is grounded in reason and can guide us forward. Assuming great success for Silk Road, how easily could it become another blood thirsty cartel seeking profit at all costs? We must maintain our integrity and be true to our principles, the opportunity to make a lasting difference is too great not to.
On the American Founding Fathers:
First off, I can’t applaud them enough for what they accomplished given the circumstances. It’s easy to critique centuries later, supported by the wealth their system allowed to emerge. But I wonder how things would have happened differently had the constitution been 100% voluntary. As in, here are the rules our members live by and how those rules are amended. If you want to be in the club, you must pay your dues and follow the rules, but if you want to go it alone, or join a different club, we won’t bother you unless you bother us, and you are free to go at any time.
On Guns:
We believe that an individual’s ability to defend themselves is a cornerstone of a civil society. Without this, those with weapons with eventually walk all over defenseless individuals. It could be criminals who prey on others, knowing they are helpless. It could be police brutalizing people with no fear of immediate reprisal. And as was seen too many times in the last century, it could be an organized government body committing genocide on an entire unarmed populace. Without the ability to defend them, the rest of your human rights will be eroded and stripped away as well.
On the Federal Reserve:
The Federal Reserve system relies on the force of government to maintain its monopoly power on the issuance of money. This is how all central banks maintain their control. Without the state’s involvement, people would be free to use whatever currency they like. Historically this was gold ... If you want to use a debt based inflationary monetary system, go right ahead, doesn’t affect me so long as you don’t try to force me to use it as well.
On Liberty and Markets:
Liberty is not a pill that makes men angels. What it does do is limit the extent to which evil can be expressed in the world. Right now, in any given geographic area, we have a monopoly on many of the most vital social institutions that is maintained through violence. If voluntary organizations consolidate their power and turn on their customers and start stealing from them, putting them in cages, killing them, spying on them and telling them what they can and can’t do, well then we’re back to where we started, the present day state. But, if I am correct, and the pressure for those firms to compete with one another for our favor leads them to serve us, then we can have freedom and prosperity the likes of which the world has never known.
Fine, but Why Drugs? I think a lot of us find common ground with these passages, but the question remains, what about all the drugs? They were the primary product sold at Silk Road.
I’m not particularly a fan of drug use, but either we have the right to do as we wish with our own bodies (peacefully, of course) or else we’re slaves. It really is one or the other, no matter how much “creative” logic is invoked to win an argument.
So, as far as I’m concerned, Silk Road had every moral right to provide a financial structure that people used to sell pot, LSD, and Ecstasy. Your body, your life, your choice.
But even beyond that, a free market like Silk Road would involve drugs no matter what DPR did. This was explained in a cypherpunk paper titled Toward Private Digital Economy, published in 2004:
The development of private digital markets has followed the predictions of property rights theory. (And likely will continue to do so.) ....
By this theory, the first to wall-off private areas of cyberspace [as when creating markets like Silk Road] should be people who don’t care about the risk, or people who the rulers would be willing to hurt anyway. ....
[T]he first people to wall-off cyberspace have been exactly these. Freedom activists were first, and are now being followed by people who are gambling, hiding money from tax collectors, engaging in sex work, viewing pornography, and so on.
In other words, it was inevitable that drug sellers would flock to Silk Road. The state wanted to hurt them already, so Silk Road actually reduced their risk. Likewise drug buyers; it gave them better product and reduced, almost to zero, their chance of being shot or robbed on a nasty street corner.
DPR’s Character While I appreciate intelligence, what I really look for in other people is their character. I don’t care how much of a genius you are; if you don’t have kindness to go along with it, I’m not particularly interested in hanging out.
So, I want to close this examination of DPR with two passages that I think demonstrate his character. See for yourself:
If prohibition is lifted, where will you be? Will you forget about all this revolution stuff? Will you go back to ignoring that itching feeling that something isn’t right, that men in uniforms and behind desks have just a bit too much control over your life, and are taking more and more of your sovereignty every day? Will you go back to thinking that taxes are as inevitable as death and the best you can do is to pull as hard as you can for them until your mind, body and spirit are all used up? ....
I know where I’ll be. I won’t rest until children are born into a world where oppression, institutional violence and control, world war, and all the other hallmarks of the state are as ancient history as pharaohs commanding armies of slaves. The drug war merely brings to light their nature and shows us who they really are. ....
-----
It’s a privilege to have a stage to speak from here. It doesn’t get said enough, and it is hard to get across in this medium, but … I love you.
Who knew that a softy could lead an international narcotics organization? Behind my wall of anonymity, I don’t have to intimidate, thankfully. But yea, I love you guys. Thank you for being here. Thank you for being my comrades. Thank you for being yourselves and bringing your unique perspectives and energy.
You, of course, will make up your own mind. As for me, if Ross Ulbricht really is this guy, I want to be his friend.
A Free-Man’s Take is written by adventure capitalist, author, and freedom advocate Paul Rosenberg. You can get much more from Paul in his unique monthly newsletter, Free-Man’s Perspective.
Share or Comment on this article.
-
Changing the World: Technology Versus Politics
Doug French, Contributing Editor
We were all supposed to go vote on Tuesday. It’s our civic duty, we’re told. If you want change, your vote is more important than anyone else’s. What a crock.
Technology has replaced politics as the way toward a freer, more prosperous world.
The easiest example is one everyone understands: once upon a time, communications were controlled by employees in blue suits. The post office had everyone over a barrel. There was a problem, and government wasn’t going to fix it because the postal service was the government.
Then came FedEx and the like, along with fax machines. Now everyone gets their utility bills via email. Why send letters when you find out everything you wanted know—and lots of things you didn’t—about friends and family via Facebook?
Government has continued to grow, mucking up commerce where it can. But did you ever think you’d see the post office delivering packages on Sunday? Thank you, Amazon.
Money The Federal Reserve’s stewardship of the dollar has been atrocious. The once-proud currency has fallen in value by 95% since the Fed opened for business 100 years ago… and Ben Bernanke—and now Janet Yellen—believe it should buy even less.
When Nixon snipped the last remaining string between gold and the dollar, Ron Paul was inspired to run for office, thinking politics made a difference. He spent decades scrapping with Federal Reserve Chairmen Alan Greenspan and Ben Bernanke about central bank policies.
These exchanges gained Paul millions of followers and helped him raise millions in campaign contributions. He was able to get an “Audit the Fed” bill passed in the House. However, politics—in the form of Harry Reid—stopped it in its tracks.
Of course auditing the Fed would not make the dollar sounder. It wouldn’t give citizens a choice in what currency to transact business with or store wealth in. Auditing would only be a political charade, providing the appearance of something being done when in fact it would simply be the government checking on the government.
As Paul tilted at windmills, the Fed’s money supply inflation continued. In 2008, a person or group of people decided to take matters into their own hands, brains, and keyboards, developing the cybercurrency Bitcoin under the pseudonym Satoshi Nakamoto. It was entrepreneurship to fix a problem instead of politics.
He, she, or they designed and created the original Bitcoin software, currently known as Bitcoin-Qt. This brilliant and anonymous work is—after only a few years—providing a sound alternative to debauched government currencies, and has inspired dozens of competitors.
No political grandstanding. No interviews from Capitol Hill. No ghost-written rants in the Wall Street Journal. No horse trading or sausage making. This is the simple creation of a product to satisfy human desires. A product people trade with voluntarily, not through the force of legal tender laws.
Lending and Borrowing Regulators have had banks under their thumb. Rates are low, but just try to borrow the money. This is where the market steps in with wonderful innovations. Among the most impressive is a model of borrowing and lending much closer to what we might see in a real market economy. It is called peer-to-peer, or P2P, and it means that those who want to borrow work directly with those who want to lend, bypassing the intermediary role that banks have traditionally played.
The market is providing solutions that permit all of us to participate in a system that’s effectively freer than the banking system of the past.
For this reason, the peer-to-peer lending business is on the verge of disrupting the banking business in a big way. Through companies like Lending Club, customers can borrow directly from savers who wish to lend. There’s no army of bank vice presidents or their country club memberships to pay for in between them.
The P2P model can work for lenders looking to earn a decent return on their money as well, while banks pay little or nothing for interest in this brave new Federal Reserve zero-interest-rate-policy world.
P2P was all the buzz at a recent conference sponsored by American Banker. When asked about the conference, Prosper Marketplace President Ron Suber stated:
Today’s event was proof that banking has collided with Silicon Valley. The combined size of Prosper and Lending Club has proven that borrowing and lending are now changed forever. Traditional banks are now forming relationships with us so they are not left behind. The proliferation of platform diversification is further evidence of the permanency of the industry.
So how can investors earn high returns while borrowers pay competitive rates? “It is a more direct funding process between the investors and the borrowers,” Renaud Laplanche, the CEO of Lending Club, says. “There’s no branch network. Everything happens online and it is really powered by technology and the Internet. And we use technology to lower cost.”
Catching a Ride Also lowering costs are ride-sharing apps like Uber and Lift. While taxicab companies are politically powerful, ride sharing is making inroads. “It’s been a great run for New York City’s taxi medallion speculators, but the party could be coming to an end,” Bloomberg Businessweek reported in July. “The average price fell by $5 in June.” The price of medallions (licenses) had rocketed upward for years to over $1 million apiece.
The City of New York keeps medallions in short supply to keep the price up and cabdrivers happy. But Uber is operating in the Big Apple, and according to the Washington Post, “the median wage for an UberX driver working at least 40 hours a week in New York City is $90,766 a year.”
The Washington Post also reports that in San Francisco, the median wage for an UberX driver working at least 40 hours a week is $74,191. In the tech-savvy Bay area, “Uber has pretty much destroyed regular taxis in San Francisco,” a headline for Time stated. After Uber began in 2012, regular cab rides fell 65%.
But it’s not easy for Uber everywhere. Any city that depends upon tourist dollars kowtows to cabbies. The threat of a cabdrivers’ strike in Las Vegas will make a Nevada governor fold before any cards are dealt.
Uber has set up shop in Las Vegas but is staying off the resort corridor, where about 95% of cab rides begin around the airport, convention center, or strip. I can attest that the residential neighborhoods are underserved. It’s a dicey proposition, for instance, to call a cab to take you to the airport. You never know if one will show up.
Next City reports: “In Vegas, the industry is perhaps more impermeable. With only 16 companies employing around 9,000 drivers in Clark County, it’s both centralized and highly regulated; a state board oversees everything from fares to the number of vehicles authorized per company.” Last year taxis provided 26 million rides in Sin City alone.
Vegas cab companies and their union drivers won’t go down without a fight, but serving the residential areas is a great start for ride sharing.
Buying Drugs Safely The War on Drugs was declared in the 1970s and has been ongoing ever since, putting millions behind bars for victimless crimes and subjecting countless more to needless harm. Since 2006, more people have died in drug-related violence than have died in the Iraq or Afghanistan war.
Why don’t the people just elect lawmakers who will call off the drug war? It will never happen. It’s not even a subject of debate. Besides, law enforcement is getting rich using asset forfeiture laws to steal large amounts of cash under the guise that all cash is used for drug transactions.
With illegal drugs, there are no ways to settle disputes, and people risk their lives to buy and sell. Drug production isn’t going to stop, and neither is the demand. Enter Silk Road in 2011. “It was Amazon.com except for products and services that are frowned upon by political elites,” writes Jeffrey Tucker in his forthcoming book Bit by Bit: How P2P is Liberating the World. “It brought peace to the drug markets.”
Tucker believes that Silk Road’s administrator “Dread Pirate Roberts” should get the Nobel Peace Prize for his work. The authorities think differently, shutting down Silk Road after three years of operation and jailing the alleged mastermind, Ross Ulbricht.
But the market aided by technology is a game of whack-a-mole, frustrating government officials and bureaucrats. They took down one Silk Road, and another popped up. According to Tucker, “There are more products than ever before. The volume of trade is higher than before. There are safe measures for escrow and for encrypted contact between trading partners.”
What Else Can Technology Fix? There are apps under development to do most everything. Imagine if you’re stopped by a cop: you touch an app on your phone and an available lawyer is hired instantly to speak on your behalf. Looking for a parking place? An app will direct you to one. The applications are endless.
In a scathing article criticizing the sharing economy, Avi Asher-Schapiro writes, “The premise is seductive in its simplicity: people have skills, and customers want services. Silicon Valley plays matchmaker, churning out apps that pair workers with work.”
Of course Asher-Schapiro is exactly right, but he hates this idea because he’s writing for Jacobin, “a leading voice of the American left, offering socialist perspectives on politics, economics, and culture.” He believes capitalists are evil and thinks all labor should be unionized.
Asher-Schapiro hits the nail on the head with his conclusion: “There’s nothing innovative or new about this business model. Uber is just capitalism, in its most naked form.”
Yes, exactly. And it is capitalism (the more naked, the better) that creates prosperity, not politics.
-
Friday Funnies I’m dedicating this week’s funnies to one of my favorite comedic characters: Reverend Jim Ignatowski of Taxi. This clip is long (a full episode), but I think you’ll enjoy it.
Introducing Reverend Jim
That’s It for This Week Have a great weekend, and remember that freedom doesn’t mean “people are free to do things I like.” It means that they can do anything, so long as they don’t intrude on others.
Paul Rosenberg
Editor, A Free-Man’s Take

===
Apple Pay Launches with a Thud, Getting Denied at Big Retailers
The pitched battle to replace your wallet—or what’s inside it—just got much hotter. In the race to dominate every aspect of your personal life, Apple premiered its much-hyped Apple Pay service last week. Owners of the new iPhone 6 series of phones can now finally use a technology that has long since been available on tens of millions of Google Android phones to pay for things.
Much like those cellphone barcode boarding passes at the airport, the idea is to replace a simple passive object (for the airport, paper; for Apple, the old magstripe credit card) with better technology. The process for paying with Google or Apple’s tech goes like this: you get out your phone, swipe it by a specially equipped machine, enter a pin on the phone (or use your fingerprint in Apple’s case), then select a card account, which then transmits one-time-use credit card info to the machine. Tech proponents say it’s much more secure since an unscrupulous employee or even a hacked payment terminal can’t steal a card number that can be used again. To me, it sounds like a lot of work to do what a card already does without having to worry about dead batteries, crashing apps, etc. Not that I have an opinion…
But CVS certainly has one. The store announced that it would disable the near-field communications (NFC) tech that Apple and Google use on its payment terminals, blocking the new service. The move was meant to support CurrentC, an alternative developed by an industry trade group to which CVS, Rite-Aid (which also made the same move), and many other retailers belong. Over the years, CurrentC has deployed simpler barcode-based smartphone apps for a wide variety of platforms, including iOS and Android, but they’ve been known to be terribly buggy and not very convenient. To push back this hard, CVS must see Apple’s involvement in the credit card chain as a major threat to margins. After all, it’s had NFC support for Google Wallet for quite some time (evidence of just how poorly Google executed its Wallet marketing).
Reviewers who spent any time with the new solutions came back nonplussed too. Engadget summed it up well (my emphasis):
Mobile payments are arguably a lot more secure. Your actual credit card number is never handed over to merchants. Apple Pay uses a Secure Element chip that encrypts user data and assigns a unique device number to each phone, while Google Wallet transactions are made with a virtual prepaid MasterCard that’s different each time. Mobile payments could therefore be the answer to the ever-present threat of data breaches and identity theft.
But until we can get it accepted at every merchant and figure out a way we can use the phone to securely carry our ID as well, it simply isn’t going to replace your wallet.
Nor are credit card makers content to let the wallet be replaced. They have their own secure solution, “chip+pin” (or EMV), with similar security features. Instead of adding a phone into the mix, they make the credit card smarter, holding on to the credit card number until you enter a code to unlock it. A compromised payment terminal is a risk, like what happened at Aldi a few years back, but then again so is a hacked phone with NFC… and which is more likely?
One has to wonder if merchants and Visa will be happy about adding powerful new players into the payment chain. Though, when consumers catch wind of the newest glaring security hole in those chip+pin cards discovered last week, which allows hackers to steal up to a million dollars per card simply by walking near you, they might just demand Apple Pay.
Elsewhere in the ecommerce world...
US Credit Card Security Push Will Replace Billions in Hardware
We don’t usually lump credit card payment terminals into the “cool gadget” category, but last week the former head of aforementioned Google Wallet—who left to do his own startup (the hard part of being one of Silicon Valley’s big employers is that your best people can easily leave and compete with you)—announced a slick-looking new device to replace those tired-looking payment terminals at cash registers around the US.
Dubbed Poynt, the announcement is not coincidentally timed. Next year the US starts adopting new payment security standards, which will require almost every terminal not replaced in the last year or two to be ditched in one fell swoop, lest the merchants using them face big penalty charges for using old, less secure tech. It’s going to be a multibillion-dollar hardware upgrade cycle; thus competitors new and old (like VeriFone) are salivating at the chance to gain some share during the swap.
Poynt works with the old magstripe cards we know, but also supports EMV, the standard those who live in Europe, Asia, and even Canada have long had. It’s also wireless, Bluetooth, and NFC compatible—meaning it works with Apple Pay and Google Wallet, if those ever do take off (they won’t). TechCrunch has all the details and lots more slick gadget photos.
No Commerce Without Government Sanction? AirBnb Law Sets Ugly Precedent
It may sound like something out of a fascist regime, but that seems to be the direction we’re headed in America. In the country where Marshmallow Fluff went from a home kitchen to a multimillion-dollar business, it’s anathema to think that today’s laws would make the whole endeavor illegal from the get-go. But evidence continues to mount that we have gone decidedly anti-commerce.
The latest turn of events: the People’s Republic of San Francisco is pushing a law to severely restrict the use of HomeAway and AirBnb-style hotelier sites. Prodded by angry neighbors—or by the hotel lobby, do you think?—the city decided to permit only residents of the city to use their property as such. Nonresident owners are being told they cannot do short-term rentals, only long-term ones.
The city council says they’re doing it to prevent or lessen a housing shortage in the city. Yet more evidence of government protecting entrenched business models (hotels in this case… just like the ludicrous laws to prevent car manufacturers from selling directly instead of through dealers, meant to slow down Tesla’s onslaught). Thankfully, HomeAway is suing to block the law… as are others.
(Curiously, AirBnb isn’t suing, as the law is actually designed to support its business model, requiring the companies arranging rentals to collect taxes centrally, which it can do; HomeAway can’t do that without a big change to its business. This is, at least, according to HomeAway.)
It reminds me of the ludicrous battle that occurred down the street from my place in Vermont, where neighbors were mad at The Alchemist, brewers of top-ranked microbrew Heady Topper. Its creators were forced out of their small brewing site by neighbors who didn’t like the traffic from customers. The business was drummed out of town with help from the zoning board. Yet the company couldn’t move to the next town over because a competitor started making a squawk about some rare bird that supposedly nests where The Alchemist wanted to build its new location. The whole debacle is still unfolding many months later.
Is this the world we now live in, where success is punishable by law, unless you grease the right palms? Let’s all hope that intelligence prevails in the judiciary of California (just typing that out is depressing), and it upholds the ability of people to engage in commerce without permission. If not, I suspect we’re screwed as a nation. If only our lawmakers would focus on protecting us from real threats like the unprosecuted frauds of the mortgage debacle, instead of piling on superfluous new regulations that just deter or extort business.
SSD Consolidation Continues
The days of the spinning hard drive are numbered. Cellphones, tablets, etc. have never even considered them an option. They suck way too much power and take up far too much space. The solid state drive (SSD) is less power hungry, shockproof, and WAY faster. Only problem is it’s still an order of magnitude more expensive than its predecessor.
So when it comes to storing lots of data that don’t all need to be accessed at lightning speeds, spinning disks still rule. Until that cost gap finally closes, SSD manufacturers are using software to make their devices work in tandem with old-fashioned spinning disks, giving them a way to still be valuable for those big archival data farms. In fact, HDD sales are up 6% over last year, to a projected 423 million shipments this year.
The latest sign that SSD makers see this as big game came with Samsung’s purchase of hot San Fran startup Proximal Data. The deal, done at an undisclosed price, was the second for Samsung that also grabbed NVELO, which was working on the same kind of technology in 2012.
The Hackings Will Continue Until Morale Improves
It looks like viruses are on their way for Mac users, thanks to a big security flaw in the new OSX Yosemite.
That just piles on top of the serious flaw in popular content management platform Drupal, which powers such websites as Whitehouse.gov and which left potentially millions of domains exposed and many confirmed hacked last week. Within hours of the October 15 notice to the world that the software was vulnerable, hackers began exploiting it to steal data, inject malicious code, and otherwise take over websites unbeknownst to owners.
It’s not just hackers either. ATT and VZW are placing “supercookies” on your phone to track and report all kinds of stuff. Better start actually reading those terms of service agreements you click right past. Your cellphone company isn’t the only one selling every bit of data it can about you: your ISP at home sells your clickstream too, and lots more. Same with your credit card.
The rule is simple: if you need it private, don’t put it on a computer of any kind. At least not one connected to the Internet. It’s unfortunate for all of us, not just the celebutants who had their privacy flagrantly violated for the world’s unscrupulous to see, but it’s the time we live in.
If you do want to keep something secret, then follow this fantastic guide to how Edward Snowden did it.
Darknet Commerce Is Booming
The Economist recently published a great overview of the growth of so-called Darknet sites, which use software to keep user identities hidden from prying eyes (a somewhat dubious claim, many studies have shown). With perceived anonymity as cover, all kinds of illicit activity occurs, including the sale of drugs and weapons. The article included this great chart of the comeback since the infamous Silk Road marketplace was shut down:
Of course, even on the Darknet—maybe especially on the Darknet—you’re not immune to hackers. Recently, at least one node of the Tor anonymous peer-to-peer network was hacked. Intruders were wrapping any downloaded program with a Trojan Horse, regardless of where it came from, as it passed through the hacked computer. The risk of any proxy service, P2P or centrally managed, is that it provides a bottleneck for hackers to exploit. The same could be done to a commercial proxy as well, or even your ISP, were they to be hacked… so keep that virus scan up to date.
Plus, who wants to be on the Darknet anymore, now that it has Facebook?
Wii U Sales Boom, Nintendo Profits, Thanks to Go-Karts
Last week Nintendo surprised a whole lot of people by finally being profitable again, albeit for a very brief period of time. The company’s Wii U console hasn’t sold nearly as well as previous generations. It’s also losing share to the latest PlayStation and Xbox models—something consensus chalked up to its decidedly kiddie vibe and giant-awkward-touchscreen-joystick-controller-thingies.
But last week we found out otherwise. Thanks to the release of the eighth iteration in its Mario Kart series, system sales boomed, and the company finally made some money again… albeit for one quarter. Reuters has the detailed numbers, but with 1.1 million consoles sold in the quarter, putting Nintendo in at well over 7 million total consoles sold, the Wii U is now firmly ahead of Microsoft (which sold 3.9 million Xbox Ones so far) and Sony (4.1 million PS4s) in the console race.
Still, the company has been bleeding money up until now. And the gaming and business press have been pushing Nintendo to change its game plan, putting out its famed character games to license for mobile devices and possibly for other consoles, too. Punditry has it that the company could make a lot more money by reaching far more devices. Software certainly has higher margins, especially for Nintendo’s competitors, which sell their beefed-up systems at cost.
For now at least, it looks like Satoru Iwata (Nintendo’s 12-year CEO, who is just recovering from cancer surgery) may have had the formula right all along, pushing his marketing budget to the moon to gain share on the back of fun games, not hardware specs. He’s playing the Silicon Valley race, focusing on market domination over profitability up front, only to turn the corner late and hard, sure of his traction, to cement a commanding lead.
Microsoft is slashing prices to try to catch up from third place, but as an owner of two Xbox One consoles, I can tell you I’m a little bit jealous of the Wii U crowd right now, wishing there was even one decent exclusive game for my year-old super hardware. Instead, I’ve got a half-working Xbox Fitness with less content than when it launched, and a bunch of boring shoot-‘em-up games (I guess that’s why Microsoft canned its home-baked TV/movie studio).
Now that looks like fun… and as Jordan Shapiro points out, it’s much more mature than the shooter fare. No wonder GameStop’s revenue jumped 25% near the same time as Nintendo’s return to profitability.
Great games, not hardware specifications, sell consoles. A master lesson from the longtime video game champions, Nintendo.
A few other reads of note:
  • Microsoft chased Fitbit, Nike, Jawbone, and half a dozen others into the wearable fitness tech business with its new Band. One more thing to sell at those Microsoft stores popping up everywhere. Maybe someday soon they’ll sell full-fledged computers there…
  • Speaking of Apple, CEO Tim Cook revealed he was gay (which everyone knew) just in time to get in front of news that all those leaked nude photos were coming off a flawed iCloud that didn’t rate limit password attempts. PR geniuses.
So… what did you think of the format? More valuable? Less? Just right? Comment below, or direct your email to info@caseyresearch.com (reading this in email? just hit reply) and our top-notch customer service team will forward it to me.
Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)