> compute looks like "the worst business in the world". His recipe for a bad business: "high capital cost, low marginal cost, subject to competition and with technical improvement". With these ingredients, new entrants push prices down to marginal cost, businesses can't recover their capital costs, and they go bust.
He says its useful (like solar, airlines, fiber), but it won't be profitable. High capital cost, low marginal cost, subject to competition and with technical improvement --> these four factors guarantee businesses will never be profitable, and they go bust.
> compute looks like "the worst business in the world". His recipe for a bad business: "high capital cost, low marginal cost, subject to competition and with technical improvement". With these ingredients, new entrants push prices down to marginal cost, businesses can't recover their capital costs, and they go bust.
He says its useful (like solar, airlines, fiber), but it won't be profitable. High capital cost, low marginal cost, subject to competition and with technical improvement --> these four factors guarantee businesses will never be profitable, and they go bust.
Jo Walker interviews John Hempton, an Australian hedge fund manager who runs a long/short portfolio.