The Short Story of Budgets

This first caught my eye, because it was about someone looking for indicators that Apple stock would be heading down. I like to see what other people see as indicators. But the whole article is pretty good, so I’m recommending a thorough read. A couple comments, of course… first on budgets:

You can put all your options into an ordered list with paying the power bill at the top and buying me beer at the bottom. Once you get past the things you must do else the business stops, you get into a mix of what you need to do and what you’d like to do.

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So as you move down the ordered list you inevitably get less bang for your buck as necessary spending evolves into good spending into nice to haves and ultimately “we’ve got to spend X by the end of the year else our budget will be cut next year.”

You could act for the good of the firm by saying “we don’t need more cash”. But in 30 years of IT I have never seen this happen. Have you?

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Freed of the discipline of paying urgent bills, you don’t just pocket the spare cash (usually), but it’s easier in your own mind to justify things that are sort-of useful like those really cool biometric eye scanners for the comms room or an off-site team meeting in a nice hotel with spa and reassuringly expensive bar.

Hey, does this sound like any governments you know?  Who out there has thought of the unintended consequences of having too much money to play with?  Ok, put your hands down…

And when the conversation shifts from Apple to Oracle, we find this in the article, referencing Apple going the Si path way, and buying ARM:

Also of course the bigger your firm, the bigger your pay so both your ego and your wallet swell through mergers. Larry Ellison is a very smart manager and so committed to the interests of his shareholders that I’m sure that one day, maybe even in our lifetimes, the Sun acquisition may pay off.

Oracle had loads of money, it still is hardly poor, but if it were led by a someone of less stature than Mr Ellison a person more cynical than me would think that the merger was driven solely by a desire to overtake Carlos Slim as the richest man in the world. It’s also obviously only a coincidence that Oracle sponsors big yachts which are an interest of Mr Ellison’s.

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Although Apple could buy ARM, that might well damage this stupidly successful British chipmonger. ARM has good relationships with all the smartphone makers because it is a supplier not a competitor. Would you want to share your product plans with Apple?

Also ARM may screw up one day and produce a third-rate chipset. If they’re an external supplier you just pitch up to Intel or nVidia, but if they’re in the family you end up having to use their stuff whether it is good or not.

Apple used to have a silicon business, and it took the company way south, because they tried to do everything they could to prop up the PowerPC, even after IBM gave up.  It put Apple in a deep hole for years.  Of course, times change, and many people believe you can design chips and build enough difference around them to still survive.  Hmmm.

There’s a nice bit at the end about Apple needing to bet the farm on every new product to keep the revenue stream flowing, and that’s also true.  A diversified company like IBM can bet on any number of technology initiatives and survive if one or two drop.  If Apple takes a hit on a product launch, then the stock is toast.  This can’t many anyone comfortable with the long-term success, but then again, having a pile of cash in the bank does offer many options to the company.

Keep an eye on Apple (and Oracle) in the near future.  Some pretty interesting stuff is going to happen if it’s going to stay on top of the market.  Otherwise, it’s back to fighting for market share and hoping the hipsters don’t get tired of it.