Posts Tagged‘price’

HTC Vive Will Debut at $799.

The $599 price tag of the consumer Oculus Rift was off putting to many, including myself. It’s not that we expected the technology to be cheap, more that our expectations were set at what we considered a much more reasonable level. I wrote at the time that HTC and Sony would likely rush in with their own VR headsets swiftly afterwards, likely a much lower price point, to take advantage of the Oculus’ more premium status. I was right on one count, HTC has since announced theirs, but at the higher price point of $799. It seems that, at this stage in the game, there’s no way to do VR on the cheap.

VR_Web_Product_HMD

Whilst the two products are largely comparable in terms of raw specifications, having the same screens for each eye and both providing the same level of “sit down” VR experience. However the Vive pulls ahead of the Oculus in two respects, the first of which being the inclusion of two hand tracking controllers. The current version of the Oculus includes an XboxOne controller with their Touch controllers due out sometime later this year (at a currently undisclosed price). However what really sets the HTC Vive apart from the Oculus is the inclusion of two Lighthouse tracking base stations which allow the Vive to do full body tracking in a 16m² space.

These two additions explain the price gap between the two headsets, however it also shows that there’s a floor price when it comes to VR headsets. I had honestly thought that both HTC’s and Sony’s offerings would come in at a cheaper price point than the Oculus however now I’m not so sure. Sony may be able to cut some corners due to the stable hardware platform they’ll be working with (the PS4) however I don’t think that will make it that much cheaper. Indeed looking at the current specs of the PlayStation VR shows that the only real difference at this point is the slightly lower screen resolution (although it does support 120hz, superior to the Oculus and Vive). With that in mind we’d be lucky to see it much, if at all, below the $599 price point that Oculus set last month.

So for Oculus debuting at the price point that they chose might not have been the disaster I first thought it would’ve been. Oculus might very well have developed the Model-T of VR that everyone was hoping for, it just ended up costing a lot more than we’d hoped it would. For many though I still feel like this will mean they’ll give the V1.0 VR products a miss, instead waiting for economies of scale to kick in or a new player to enter the market at a cheaper price point. This will hamper the adoption of VR, and by extension titles developed for VR, in the short term. However after a year or two there’s potential for newer models and the secondary market for used headsets to start ramping up, potentially opening up access to customers who had abstained previously.

For myself I think I’ll have to wait to be convinced that the investment in a VR headset will be worth it. I bought a Xbox just so I could play Mass Effect when it first came out and, should something of similar calibre find itself on any one of the VR platforms, I can see myself doing the same again. However right now the relatively high price point coupled with the lack of enticing titles or killer apps I’m not really willing to make such an investment in a V1.0 product. I, as always, remain willing to have my opinion changed and, by consequence, my wallet opened.

The Real Cost of the Oculus Rift’s Price.

The Oculus Rift Kickstarter campaign showed that there was a want for virtual reality to start making a comeback. However the other side of that equation, the ones who’d be delivering experiences through the VR platform, weren’t really prepared to capitalize on that. There are numerous reasons for this but mostly it comes down to consumer VR still being a nascent industry with the proper tooling still not there to make the experience seamless. Unfortunately it’s something of a chicken and egg problem: standards and tooling won’t fully emerge until there’s a critical mass of users and those users won’t appear until those standards are in place. This is why the high price of the Oculus Rift consumer model costs far more than its sticker price.

Oculus Rift

Many looked towards the Oculus Rift as the definitive VR headset, something which Oculus has obviously taken into account when designing it. Whilst I, as an early adopter of many pieces of technology, may appreciate the no-holds-barred approach for devices like this I know this limits broader appeal. Whilst this is sometimes a good strategy in order to get your production line stood up (ala Tesla when they produced the Roadster and then the Model S) the Oculus already had that in the previous two iterations of the dev kit. I think what many were expecting then was the Model T of VR headsets and what they got instead was a Rolls Royce Phantom.

However Oculus is no longer the only name in the game anymore with both the HTC VIVE PRE and the PlayStationVR headsets scheduled to come out in the first half of this year. Both of these are targetting at much more reasonable price point, although they admit that their headsets are not as premium as the Oculus Rift is. Whilst Oculus’ preorders may have surpassed their expectations I still feel that they alienated a good chunk of their market going for the price point that they did. For those who balked at the Oculus’ price the other two headsets could prove to be a viable alternative and that could spell trouble for Oculus.

Whilst Oculus won’t be going anywhere soon as a company (thanks entirely to the Facebook acquisition) they will likely struggle to cement their position as the market leader in the VR headset space. Indeed the higher price point, which according to Oculus is the bare minimum they can charge for it, won’t come down significantly until economies of scale kick in. Lower sales volumes means that takes much longer to come into effect and, potentially, HTC and Sony could be well on their way to mass produced headsets that are a fraction the cost of the Oculus.

In the end it comes down to which of the headsets provide a “good enough” experience for the most attractive price. There will always be a market for a premium version of a product however it’s rare that those models are the ones most frequently purchased. Oculus’ current price point puts it out of the reach of many, a gap which HTC and Sony will rush into fill in no short order. The next year will then become a heated battle for who takes the VR crown, showing which product strategy was the right one. For now my money is on the cheaper end of the spectrum and I’m waiting to be proved wrong.

Please Valve, do for Other Content What You Did for Games.

I’m a big lover of Steam. Whilst it had a rather rocky start, something that was exacerbated by the fact that I was still on dial up, since then the platform has managed to make me part with many of my dollars and I have done so gladly. Sure part of this is due to me moving up in the world, no longer being a poor uni student whose only indulgence was his World of Warcraft subscription, however Steam providing titles at a very reasonable price has also led me to spend more than I would have otherwise. So when rumours start to spread that Steam might be bringing things like music, TV shows and movies to the platform you can imagine the excitement I have at that prospect.

Steam Music UIThere’s been talk of Steam expanding beyond it’s current games and software market for some time now, ever since Valve announced the Steam Music overlay at the beginning of this year. There’s also already a few movies on the platform, like Free to Play and Indie Game: The Movie, and whilst they’re specifically about games it’s not much of a stretch to think that they’d extend the platform further. The only precedent not set so far is for TV shows however it’s not much of a stretch to see the same system working for that kind of content. There’s still a few questions to be answered about the service (When will it debut? How will its costs compare to other services? ) however if Steam can do for what it did for games for movies, TV and music you can bet your bottom dollar that it will be an incredibly positive thing for consumers.

The reason, for me as an Australia at least, is that there’s really no other alternative available to us. I was excited when Dendy Direct was announced, mostly because I’m a fan of their cinemas, however their pricing is nothing short of insane with a single season of a show costing anywhere from $20 to $40. Other services available here are either similarly priced or simply don’t have the catalogue of shows that many of us want to watch. Even if the services available here do have the shows they’re either significantly delayed or released in such a way that’s incongruent to the way they were released overseas, like Netflix original series being released weekly instead of all in one hit.

There’s always the geo-unblocking tools to get us Netflix of course but that’s really only a stopgap to a better solution.

We’re getting closer to a proper solution though as there’s been at least one notable entrant into this field that’s not completely bullshit. AnimeLab, run by Madman (the Australian anime distributor), offers up complete anime series for any and all to watch for free, including ones that are only just being released in Japan. Whilst I’m sure the free ride won’t last forever it does show that there’s demand for such a service in Australia, even within the niche interest area that is anime. I’m hopeful that this will encourage other services to start considering branching out into Australia sooner rather than later as it honestly can’t come fast enough.

Tesla Plays With The Big Boys and Wins.

Elon Musk is quite the business magnate. Long time readers will know that he’s the CEO of SpaceX the current darling of the private space industry which has done as much innovation in a decade as others have done in half a century. However that’s not Musk’s only endeavor having started out by working in the payments industry, famously being PayPal’s largest stock holder when it was eventually acquired by eBay for $1.5 billion. That allowed him to create 2 companies of his own: SpaceX and Tesla Motors whilst being heavily involved in a third, SolarCity. The success of all these companies can’t be denied but it wasn’t always all roses for all these companies, especially Tesla, and indeed Musk himself.

Model S

Building a car manufacturer, especially one that eschews the traditional internal combustion engine for full electric, is fraught with risk and requires massive amounts of capital to pull off. Whilst Tesla’s end goal has been affordable electric cars for everyone it didn’t start off trying to service this market, instead focusing on building a high performance electric roadster that had a very limited production run. Of course this also drew skepticism from potential investors as they couldn’t be sure that Tesla would be anything more than a niche sports car producer and so many steered clear. However Musk was undeterred and in 2008 announced the Model S and hinted towards further models that would use the same power train, effectively creating a platform for the rest of Tesla’s fleet.

To say that the rest of the world was skeptical that they could pull this off would be putting it lightly. Indeed even though they managed to secure a $451.8 million dollar loan from the Department of Energy to help set them up investors still continued to short their stock heavily, to the point where it was one of the most shorted stocks on the NASDAQ. Some went as far as to say that Tesla was only profitable due to the American tax payers, words which would soon be served right back to them with a serve of humble pie when Tesla paid the loan back in full at the start of this year, 9 years before it was due. Since then Tesla’s stocks have continued to climb and it’s not just because people are looking for a pump ‘n’ dump.

The Tesla Model S won car of the year from Motor Trends and Automobile Magazine last year rocketing it from being a toy for the technical/green crowd to being a well known brand. Whilst it’s still not in the realm of the everyman with the base model still being some $65,000 it has still proved to be quite a popular car snagging 8% of the luxury car market in the USA. To put that into perspective that means the Model S has beaten the sales of both the BMW 7 series and the Audi A8, cars which have a pretty loyal following and have been around for decades. They’re only just beginning to ramp up production as well with the current 400 or so produced per week expected to double by years end making them one of the largest producers of purely electric vehicles.

Tesla has not only shown that fully electrical vehicles are possible today they’re also, in fact, great business too. Whilst the investors might be skeptical other car companies aren’t with the number of EVs available exploding as each manufacturer tries to carve out their own section of this market. Most of them are focusing on the low end now however and it’s highly likely that Tesla will eat their lunch when the eventual $30,000 model debuts sometime in the future. Still the more competition in this space the better as it means the products we get as consumers get that much better and, of course, cheaper.

Now all we have to do is hope that the Australia Tax doesn’t hit the Model S as that’d put the kibosh on my enthusiasm a little bit.

It’s Official: The Australia Tax is Real.

If you’re a person who lives in Australia who has the Internet then chances are you know of the vast disparity in prices between goods available here in Australia and those overseas. For some things a small gap is reasonable, I mean it does cost a bit to ship things here to Australia, but when it comes to things that don’t require shipping (like software) the price gap makes a whole lot less sense. Indeed this point was highlighted when the price difference between Australia and the USA was enough to cover the cost of a flight and still come home with change to spare. For those of us who’ve been dealing with this for years now (thanks Steam!) we have a term for this sort of thing.

We call it the Australia Tax.

AUSTRALIA TAX FUCK YEAHWe’ve found our ways around it though like using DLcompare for finding cheap games and doing all my major purchases online from overseas retailers. This does mean that we sometimes have to resort to slightly devious ways in order to get things sent to us but the savings we can make because of it are usually worth the effort. I had honestly given up on this situation ever changing as the word from those distributing their products here was essentially that we  were willing to pay more and, therefore, should pay more (which, strangely enough, only happens because we used to have no other way of getting the product). It seems that a few people in power have noticed this however and last year they launched an investigation into the reasoning behind the huge price disparity specifically centered on IT goods and the results have just come in.

The Australia Tax is very real and it is quite unjustified.

Most of the recommendations from the investigation are then what you’d expect, mostly more government action and increasing public awareness of the issue. However there were 2 points that seem like absolute gold to Australians, if they ever manage to get through parliament:

  •  If companies do not agree to lift geoblocking, or to give consumers the tools they need to circumvent it, the committee recommended enacting a ban on geoblocking “as an option of last resort”. It also recommends voiding any law which seeks to enforce geoblocking.
  • The committee also wants a “right of resale” law to be created in relation to digitally distributed content. This is an interesting possibility which might allow Australians to resell their old music and ebooks for the first time, among other thing

Getting around geoblocking is a pretty trivial exercise these days, if it can’t be done via the use of a Chrome extension then you’ll need to spend a few dollars on a VPN service although that can sometimes lead to issues of its own. Enacting a law preventing companies from geoblocking in Australia might stop some of the less than savy companies from doing it but realistically I can see most of them hiding behind the cover of “currency conversion” or something similar to achieve the same effect. The last round of inquiries into price gouging were enough to get some of the big players to drop their prices in response so maybe just the threat of that will be enough to get them more in line.

The second point is something we’ve heard a little bit about before although not within Australia’s borders. There’s a few cases in the EU looking to establish this exact legal framework, opening up the opportunity to resell digital only content. Indeed that was one of the better features of Microsoft’s restrictive DRM policies for the Xbox One, something that I’m sure not too many gamers were actually aware of. As someone who’s got dozens of spare game keys due to Humble Indie Bundles and whatnot this is something that I wouldn’t mind having although it ever getting through isn’t something I’m counting on. What the outcome is in the EU will likely heavily influence such a decision.

So it’s great that the government is now aware of the problems facing Australian consumers but now they need to seriously considering the recommendations so that some pressure can be applied to these retailers. Whilst the outcome of most of the recommendations won’t affect the savy consumers much (we already know how to get our way) I know that not all consumers want to do those things and, honestly, they shouldn’t have to. Whether the more out there recommendations get implemented though will be really interesting to see although I get the feeling we’ll be seeing  Gerry Harvey in the news ranting about them sooner or later.

The Longevity of Next Gen Consoles.

There’s an expectation upon purchasing a console that it will remain current for a decent length of time, ostensibly long enough so that you feel that you got your money’s worth whilst also not too long that the hardware starts to look dated in comparison to everything else that’s available. Violating either of these two constraints usually leads to some form of consumer backlash like it did when the Xbox360 debuted rather shortly after the original Xbox. With the next generation bearing down on us the question of how long this generation of consoles will last, and more importantly stay relevant, is a question that’s at the forefront of many people’s minds.

Durgano Block Diagram

 

Certainly from a purely specifications perspective the next generation of high performance consoles aren’t going to be among the fastest systems available for long. Both of them are sporting current gen CPUs and GPUs however it’s quite likely that their hardware will be superseded before they ever hit the retail shelves. AMD is currently gearing up to release their 8000 series GPUs sometime in the second quarter of this year. The CPUs are both based off AMD’s Jaguar micro-architecture and should be current for at least a year or so after their initial release, at least in terms of the AMD line, although with the release of Haswell from Intel scheduled for some time in the middle of this year means that even the CPUs will be somewhat outdated upon release. This is par for the course for any kind of IT hardware however so it shouldn’t come as much of a surprise that more powerful options will be available even before their initial release.

Indeed consoles have always had a hard time keeping up with PCs in terms of raw computing power although the lack of a consistent, highly optimizable platform is what keeps consoles in the game long after their hardware has become ancient. There does come a time however when the optimizations just aren’t sufficient and the games start to stagnant which is what led to the more noticeable forms of consolization that made their way into PC games. It’s interesting to note this as whilst the current generations of consoles have been wildly popular since their inception the problem of consolization wasn’t really apparent until many years afterwards, ostensibly when PC power started to heavily outstrip the current gen consoles’ abilities.

Crytek head honcho Cevat Yerli has gone on record saying that even the next gen consoles won’t be able to keep up with PCs when it comes to raw power. Now this isn’t a particularly novel observation in itself, any PC gamer would be able to tell you this, but bringing in the notion of price is an intriguing one. As far as we can tell the next generation of consoles will come out at around $600, maybe $800 if Sony/Microsoft don’t want to use them as loss leaders any more. Whilst they’re going to be theoretically outmatched by $2000 gaming beasts from day 1 it gets a lot more interesting if we start making comparisons to a similarly priced PC and the capabilities it will have. In that regard consoles actually offer quite a good value proposition for quite a while to come.

So out of curiosity I specced up a PC that was comparable to the next gen consoles and came out at around $950. At this end of the spectrum prices aren’t affected as much by Moore’s Law since they’re so cheap already and the only part that would likely see major depreciation would be the graphics card which came in at about $300. Still, taking the optimizations that can be made on consoles into account, the next gen consoles do represent pretty good value for the performance they will deliver on release and will continue to do so for at least 2~3 (1~2 iterations of Moore’s Law) years afterwards thanks to their low price point. Past then the current generation of CPUs and GPUs will perform well enough at the same price point in order to beat them in a price per dollar scenario.

In all honesty I hadn’t really thought of making a direct comparison at the same price point before and the results were quite surprising. The comparison is even more apt now thanks to the next generation coming with a x86 architecture underneath which essentially makes them cheap PCs. Sure they may never match up to the latest and greatest but they sure do provide some pretty good value. Whilst I didn’t think they’d have trouble selling these things this kind of comparison will make the decision to buy one of them that much easier, at least to people like me who are all about extracting the maximum value for their dollars spent.

Finding The Ideal BitCoin Exchange Rate.

BitCoins are a hybrid of two currency models, namely the current world standard of fiat currency (I.E. BitCoins only have value because other people will accept them in exchange for goods and services) and the traditional gold standard due to the availability being limited. Combined with the other properties such as transaction anonymity (within reason), no central system regulating transactions and worldwide reach BitCoins have all the features it needs to be a great vehicle for the transfer of wealth. Long time readers will know that there are some issues that plague the BitCoin ecosystem, mostly due to its relatively low transaction volume and misclassification as an investment vehicle by some, but these are things that can be solved with time and more investments.

One thing that always gets to me though is any time that BitCoins start to trend upward nearly every news outlet looking for a story will herald it as a second coming of BitCoin after the devastation wrought by the speculative bubble last year. I’ve made the case several times over that an increase in price is no indication of health within the BitCoin economy and in fact any sharp uptick in price is actually quite hurtful as it signals that BitCoins are better left unspent as it makes no sense to spend them when simply waiting will give you a discount. This hoarding mentality is what led to the speculative bubble last year as supply dried up and prices went through the roof. It didn’t last long however and the price came crashing back down to reality (and then some).

 I don’t discount that all growth within the BitCoin economy is a bad thing however, just the volatility. Indeed there was a good period of 6 months this year when BitCoin’s price was relatively stable and that’s what it needs to be in order for commerce to take the currency seriously. Taking this idea further there has to be a price equilibrium where the exchange rate is truly representative of all the wealth contained with BitCoins and this is the point where the market should aim towards. Figuring out that particular price isn’t easy though and I can only really give a semi-education guess as an answer.

The longest time that BitCoin spent in relative stability was around the $5 mark from around May this year. Since then there have been another 1.2 million BitCoins added into circulation, an approximate 13% increase. In a completely stable exchange this would have put a downward pressure on the exchange rate which would have decreased the real value by a similar percentage. To keep the value “ideal” then, I.E. the real purchasing power the same, the exchange rate should go up by that rate instead giving us a new price of $5.65.

Of course this completely ignores the amount of potential wealth that could be contained within the BitCoin economy. A country’s currency is usually a reflection of the health of its underlying economy and BitCoin is no exception to this but we don’t have other metrics like GDP in which to get a good idea for how much wealth is backing it. Transactions volumes, exchange rates and total coins in circulation are only rough metrics and we’ve seen in the past how these things aren’t great indicators for the health of BitCoin.

Realistically the best exchange rate for BitCoins will be the one that it ultimately settles on once transaction volumes ramp up again and the investor market segment starts to become more and more irrelevant. Whether this is above or below the current rate is really anyone’s guess however we should still abstain from saying that the rising price of a BitCoin is a sign of market health as it’s simply not. Whilst the price rise is no where near as rapid as it was last year it’s still light years ahead of any other currency on the planet and as history has shown that kind of growth just isn’t sustainable. The next 6 months will be very telling for the BitCoin economy as we’ll see if this growth levels out into a new stable equilibrium or if it’s just the beginning of another speculative bubble.

Apple’s Win Could Hurt Them More Than Samsung.

I haven’t talked about the Apple vs Samsung court case that’s been raging on for the past year mostly because I didn’t feel like there was anything interesting to say about it. Usually these kinds of court cases are business negotiations that have gone south and they’re just using the legal system to figure out who should be paying who for what. The Apple vs Samsung case was slightly different as it appeared to be more of a move from Apple to try and block Samsung out of the USA market, one where they’re starting to get quite the foothold thanks to their flagship Galaxy devices selling like the proverbial hotcakes. Samsung isn’t completely innocent in this regard either, pulling the same kind of tactic in other markets.

Of course the news recently broke that after 2 days of deliberation the jury on the Apple vs Samsung case returned the verdict that Samsung had indeed wronged Apple and were awarded a cool billion dollars in damages. The damages were broken down on a per device level based on the jury’s judgement of how much they infringed on what the appropriate damages would be. No matter what the decision in the case ended up being there was always going to be something of a media storm following it, and boy was there ever.

On the surface it didn’t look like the fallout from the case was doing Samsung any favours. Trading for Samsung stock closed 7% down on the day after the announcement was made, wiping $12 billion of value from the company and making the fine look like a pittance by comparison. Of course the verdict isn’t completely finalised yet with a potentially lengthy appeals process (and issues with the way the jury decided the verdict could have the whole thing thrown out) to come but there’s no denying that the immediate down turn in the confidence that the market has in Samsung will affect them adversely in the short to medium term.

However Apple may have set themselves up for an unlikely consequence: they put Samsung in the same league as them.

Us high tech geeks could rattle off the differences between Apple and Samsung’s products for hours and realistically they’re completely different beasts. However with this very public lawsuit Apple has gone on record saying that Samsung is basically equivalent to them and that hasn’t gone unnoticed by the general public. Indeed this was very much the same way Samsung managed to establish itself as a dominant player in the LCD TV business, often being touted as the cheaper version of the higher quality Sony¹. The same thing appears to be happening in relation to Apple with Samsung more than happy to be second fiddle in such a large market. Indeed the numbers back this idea up, especially when you look at the sales figures of their recent flagship product, the Galaxy S3.

I didn’t come up with this idea myself however, that credit goes to two posts I caught on Google+. It still might be wild speculation but the history of similar things happening with Samsung and other competitors does lend some credence to the idea. Whether Samsung can capitalize on that, especially with the market looking down on the ruling, is something that we’ll only know as time goes on. Their stock hasn’t tumbled any further though so there’s some indication that the initial fine shock might’ve been just that.

Personally I feel it highlights the problems with the USA’s current patent system more than anything else. Instead of them being used to encourage innovation, as was their original intent, they’re now far more likely to be used as weapons in big lawsuits or in negotiations over licensing fees. How we go about solving that problem isn’t something I have a good answer for but until we do we’ll continue to have these kinds of high profile cases which tie up resources that could be put to much better use.

¹I will freely admit that I don’t have anything solid to back this assertion up apart from the countless hours of research I poured into finding the best TV for the right price all those years ago. A cursory search finds threads like this one  which echo the sentiment I’m referring to.

BitInstant, BitCoin Market Corrections and Cryptocurrency’s Future.

There seems to be a prevailing idea that the price of BitCoins is somehow intrinsically linked to the overall confidence in the use of the nascent cryptocurrency. If you’ve read any of my previous articles on BitCoin you’ll know that I strongly believe that that isn’t the case and indeed a rising price is usually a signal of speculative investors gaming the market to turn a quick profit more than it being an indication of market confidence. Indeed I was most bullish on the idea of BitCoin when its price  stop fluctuating which meant it was far less risky for people to use it as a wealth transfer vehicle, especially for those who are taking the risk of using them in their business.

Now I’ll be completely honest here, when I saw the first stirrings of an upward tick in BitCoin’s price I wasn’t too worried that it would lead to a speculative bubble. Sure it was dangerously close to the same ramp up just a year previous but I felt that the higher transaction volume, larger amount of wealth contained in the BitCoin network and hopefully the market’s long term memory would ensure that any growth in the price was purely organic and sustainable. Of course this discounted external actors with larger amounts of capital working to skew the market in order to turn a profit but I felt that the speculators had had their fun last year and had moved onto other, more lucrative endeavours.

Looks like I was wrong.

As you can see from the above graph the BitCoin price took a turn for the volatile side around the middle of July. Since then there’s been several spikes in trading volume most of which have coincided with a jump in the price. Whilst there appears to be islands of stability that last about a week it never lasted long before another trading bout would push the price upwards. This culminated in a peak price of about $14 late last week quickly followed by a swift downward correction in price with it stabilizing around the $10 mark. As I’ve said before this kind of price volatility is very much at odds with BitCoin being a proper currency and it’s unfortunate to see history repeating itself here again.

Interestingly though the correction in price may actually be due to dwindling confidence, but not in the BitCoin idea itself. The first lawsuit involving BitCoins and the failed wallet service Bitcoinica was lodged just days prior to the value taking a swift nose dive. This was most likely exacerbated by people attempting to cash out at the current peak as you can see the transaction volume on that day was several times higher than the average for the preceding couple of months. Bitcoinica, unfortunately, isn’t the only story of BitCoin based services that have endured failure and this could have very easily shaken the market enough to attempt to dump out early to avoid losing all their value.

The underlying cause to much of the volatility that the BitCoin market experiences is the relatively small amount of value that it captures. Whilst as a whole the BitCoin market is valued at some $97 million (total number of BitCoins in existence multiplied by current price) the total transaction volume on any given day usually only averages $800,000. That’s incredibly open to manipulation and showcases just how crazy those peak trading days, the ones where the value changing hands is on the order of 3 times the average, really are.

Now I don’t pretend to have a solution to this but a new startup called BitInstant might have the right idea when it comes to injecting more value into the market and hence (hopefully) reducing its volatility.

BitInstant is a clever little idea using prepaid MasterCard debit cards which are then backed with either real US currency or BitCoins. The cards can be recharged either by traditional means or by using a BitCoin address that’s printed on the back of the card. They make this even easier by also including a QR code on the back which would enable users to transfer BitCoins between them using things like BitCoin enabled apps on their smart phones. The details on it are still being finalized but this has the potential to take BitCoins from their current niche operations to a much larger scale and hopefully with that bring a lot more stability to the BitCoin price.

BitCoin purists will probably detest the cards since they will require some level of formal identification for them to be able to use it, thus eliminating the benefits of anonymity, but I don’t believe BitInstant’s product is aimed at them. Indeed it seems to be more of a way to make BitCoin function more like a traditional currency as currently it really is only for the technical elite or those who have a need to transfer funds in a completely untraceable manner. Giving people a physical card they can use anywhere will go a long way to making BitCoins much more palatable for the masses, something that all the current BitCoin services I feel have failed to do.

BitInstant is just one piece in the larger puzzle though and realistically its going to take many, many BitCoin enabled services to make it viable as a currency. Good news is that appears to be happening with BitInstant being just the latest contender to throw their hat into the BitCoin ring. Hopefully this means that the peaks and troughs in BitCoin’s trading price will soon be a lot more tame and then I’ll stop harping on about how BitCoin’s price is the last thing we should be thinking about if we’re serious about it being a currency.

Facebook’s IPO Was For The Company, Not The Investors.

The wonderful world of tech Initial Public Offerings isn’t the same beast that it was back in the hey days of the dot com boom. Gone are the days when caution was thrown to the wind on any company that managed to demonstrate a modicum of social proof, where the idea of going IPO was just a way to get another round of keeping a company going until they found a sustainable business model. Today whilst going IPO is still done with an eye to gather more funds for expansions they’re also big events for investment companies to make a quick buck on the hype surrounding a tech company going public. So much so that it’s become something of a trend for sexy high tech companies stock’s to soar on the first day only to come back down to reality not long after.

Take LinkedIn for example. On its opening day the share price skyrocketed, more than doubling its price on the opening day. Many took this as a sign that the tech bubble was returning with a vengeance, that tech companies would soon be inflating the market beyond its sustainable limits and that we were seeing the makings of another crash. More astute observers recognised that instead it was actually a ploy by the investment companies managing the IPO process. Instead of it being a sign that these tech companies were fuelling another bubble it was the investment companies severely under-pricing the IPO. Doing this would seem highly counter-intuitive, I mean who wouldn’t want the best debut price? The answer is of course, and unfortunately, very simple.

They wanted to be the ones who profited the most from the IPO.

Pricing the IPO so low meant that the initial buyers could acquire many more shares than they could if the IPO. Knowing that the stock was undervalued they then just had to wait for the pricing to hit it’s trading peak before unloading their shares on the market. Done at the peak of the LinkedIn IPO companies like Morgan Stanley, Bank of America Merrill Lynch and JPMorgan who were underwriters were able to get an easy 1X return without little to no risk. Employees and preferred stock holders who elected to have shares in the IPO got screwed of course, but that’s not a concern for these big name investment firms.

So it was with great anticipation that I watched the recent Facebook IPO. It’s by far the biggest tech IPO in history and also managed to set records in terms of trade volume on the first day. Since then it’s been a slow downhill trend for the nascent stock, shedding something like $11 per share since its high of around $42. Whilst the first day of trading was cause for concern, mostly because there wasn’t an insane pop like there was for all other tech stocks, the following days have been nothing short of astonishing at least for the investors who jumped in alongside everyone else on the first release shares. You’d think that this was a bad thing but for this aspiring start-uper it’s nothing short of glorious.

The other tech IPOs that showed explosive growth only did so because they were engineered that way. Now I have no idea why the Facebook IPO didn’t, it certainly had all the makings of one, but there’s a good chance that the watchful eye of the SEC had something to do with it. For all the people who bought in early they’re undeniably screwed but there is one group of people who (rightly so) profited from Facebook’s IPO: the people at the company.

The shares that made up the original offering would have come from preferred stock (early investors), common stock (employees) and options that other people had accured over Facebook’s 8 year lifespan.For them a right priced IPO that then declines in value means that they’ve got the maximum amount of value they could and were not screwed over by an artificially low stock price. Of course this has the not-so-nice aspect of pissing off a lot of investors, many of whom are now crying foul over the share price making a beeline for penny stock level. That’s warranted to some extent but you’ll forgive me if I don’t shed a tear for those companies who screwed over many a tech company in the past in the pursuit of a quick buck.

The question on everyone’s lips is where Facebook’s stock will go from here. Honestly I’m not sure, they’ve definitely struggling with mobile which is starting to heavily cut into their revenue and apparently the reason behind their Instagram acquisition but you’d figure that they’ve innovated heavily in the past so they should be able to turn it around in the not too distant future. Still all this negative press isn’t going to do the stock price any favours so unless the commentators want to see the price keep falling they should probably just shut their yaps and wait for the market to properly correct. The next few weeks will be very interesting times indeed and I can’t wait to see how the investor butthurt plays out.