1)
An interesting discussion in NYTimes on Wireless On-board.
http://roomfordebate.blogs.nytimes.com/2009/09/28/the-in-flight-menace-wireless-chatter/
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2)
Mumbai municipal corporation has just earned Rs. 26 Crore for scientific handling of garbage dumpyard. http://timesofindia.indiatimes.com/news/india/Mumbai-dump-gets-Rs-26cr-in-carbon/articleshow/5048215.cms
I am witness to this change because I lived in that suburb. We used to hate going near the creek because of the smelly garbage pile that could be seen and smelt from a kilometer away. This summer I went to Gorai Island and actually did not smell the stink. When I checked ( that is turned my head in the direction of dumpyard), the pile was transformed into a smooth surfaced hillock. It was obvious something was done about the thing but I did not know at the time that this was the work that was going on. Something to be proud about.
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3)
Swapan Dasgupta's article "Bust the myth of Good over Evil" in this Sunday's Times of India left me baffled.
What exactly is the point of this article? That we stop believing in the values we built? Or stop believing that, ideally, there should be law and order...and that if it breaks down there is a judicial process?
Mr. Dasgupta, who is generally articulate and logical, is all over the place with this article. Speaks about 80's movie endings, then about Ravan's virtue, then Kumbhakarna's moral dilemma. But what is the whole thing about?
After a certain age we all understand the reality and flaws of a system that prevent the world from becoming perfect. But does that mean that we abandon praying for the victory of good?
More than anything else, the social value of occasions such as Ramleela / Durga Puja is reason enough to keep the tradition going.
Sep 29, 2009
Sep 24, 2009
Valuing LTE Patents of Nortel - An approach - Part 2
I received a few comments on part 1 of this article. Thanks to Paddy and Fehrzard for their comments. This article is an attempt to make the first one more complete.
1. First, the disclaimer - Black Scholes assumes efficient markets as well as liquidity of the asset. Both may be challenged and rightly so.
2. Now, one very interesting thought on how to view patent is how to define it? It may be as a product or a service that can be developed as a result of the patent - this was the primary assumption in the earlier article.
However, the patent is also something that gives exclusivity to the innovation, not the innovation itself. Hence more pertinent is the value of 'exclusivity', or even the benefit from suing the competitor who infringes the patent.
3. The time to expiry is minimum of patent expiry or time for technology obsolescence.
4. A big assumption in my first article is the knowledge of investments needed in developing marketable products from the patents. Obviously, this is a difficult thing to predict. One can go by historical stats but that too is no guarantee to future. Only thing we can do is scenario analysis.
5. Finally, the opportunity cost of delaying the project also needs to be adjusted in the calculations.
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Tailpiece - Nortel has now put on block the Carrier Division - Software minus the patents. More info on All About Nortel.
1. First, the disclaimer - Black Scholes assumes efficient markets as well as liquidity of the asset. Both may be challenged and rightly so.
2. Now, one very interesting thought on how to view patent is how to define it? It may be as a product or a service that can be developed as a result of the patent - this was the primary assumption in the earlier article.
However, the patent is also something that gives exclusivity to the innovation, not the innovation itself. Hence more pertinent is the value of 'exclusivity', or even the benefit from suing the competitor who infringes the patent.
3. The time to expiry is minimum of patent expiry or time for technology obsolescence.
4. A big assumption in my first article is the knowledge of investments needed in developing marketable products from the patents. Obviously, this is a difficult thing to predict. One can go by historical stats but that too is no guarantee to future. Only thing we can do is scenario analysis.
5. Finally, the opportunity cost of delaying the project also needs to be adjusted in the calculations.
---
Tailpiece - Nortel has now put on block the Carrier Division - Software minus the patents. More info on All About Nortel.
Some pics from Mussourie trip
Thank You Venkat for the camera. I was having my old film walla camera and so am waiting for the pics to get developed. Till then, some of the pics I clicked using Venkat's camera.
Sep 22, 2009
Mighty Mountains and Merciless Man
I visited Mussourie this weekend with my friends.
As we started climbing, the views were breathtaking and we were actually in clouds. In the town, it was the typical British ambience with the mandatory Library in the main square and the Mall Road. The rickshaws, friendly people, food and the fact that you can stand anywhere in the town and admire the view made the perfect mix. Gun hill point is another lovely place to be in.
The town is like a balcony that nature has built for you. Just stand anywhere, take a deep breath and lose yourself in the beauty of the mountains.
Some credit also goes to the miserable weather of Delhi that made the contrast all the more sharp!
The best part was the trek to Shri Jwala Devi Mandir. It was about 2 kms one way. We had Santramji from Dudhli village to guide us. For me, who has been in cities most of my life, talking to Santramji made me feel what life in hills is. He has a small farm that gives potatoes, green peas and other vegetables. The village does not get regular potable water supply, so the villagers have made alternative arrangements from nearby natural sources. There is a dispensary and a school. But the school is only till 7th standard. He was sure he wanted his children to go to Mussourie after 7th...that was very heartening to know. The provisions are sent by jeep but more often it is the mules and horses who do the task. Electricity is ok but as I mentioned water is difficult. The man was so quiet and smiled so often, it is difficult not to respect someone like that.
The views while walking to the temple were awesome. Every 10 steps, there was a view to appreciate. There were flowers that nature had planted. It was amazing. Mussourie lives to its reputation of being the Queen of mountains.
Santram also spoke about the stone quarrying that used to happen in the hills and was banned by Government later. He mentioned that climate and life have improved after the ban. But is a Government ban enough? On top of the hill, by the temple was an empty water tank. There were some 20 plastic bottles thrown in by visitors.
Really, I could not see the logic in that. Elsewhere too, near the Kempty falls, so much of plastic was thrown that at times people felt distracted by the plastic. And no, the administration is not to be blamed. In Mussourie, there are good roads, facilities, proper traffic control, toilets, trash cans, directions and appeals to not litter. The trash was getting cleaned every day. It is indeed our own duty to just control ourselves till we see the next trash can. Really, it does not take much. Our actions should not work against the pure air and bliss of the nature that places like Mussourie offer.
Perhaps as the Cadbury's ad says, ask yourself - "Have you earned the pure air?"
Sep 16, 2009
Valuing LTE Patents of Nortel - An approach
Now that Nortel's Wireless and Enterprise businesses have been auctioned, Nortel still has LTE Patents with it. LTE is a considered to be a successful technology for the 4G wireless business and is expected to take the world to seamless broadband wireless paradigm. Nortel is said to have 600 patents in this area. Now let’s try to assess how this asset can be valued.
Following is with the assumption that the potential buyer is going to know everything about the patents.
1. A Patent is an asset that will be used directly or indirectly through applications based on the patent.
2. First step would be to find the directly assessable market based on history. That market is of those products this patent and its extensions can directly substitute.
That is the possible market potential.
The subjective part here is how much one can be sure on this market potential.
3. Next is finding the potential of those products that are not conceivable as of now. This is the tricky one.
(i) One way to approach this is on the basis of historical statistics of patents from the same industry. For example, in this case of 4G, we can take a random sample of 600 patents (or possibly more) from the period when 3G (or any other technology) was a new area of research.
(ii) Now analyze how many of these samples proved to be huge successes, moderate successes and damp squibs. With this as the basis, we can use the same probability on this set of LTE patents (this is a huge assumption). Obviously this is not something that will always work yet if we are going to use history as any indicator then this is one way to follow.
(iii) The next 2 things we can draw from the above sample would be the standard deviation and volatility.
4. Now if we look at this set of patents as an asset, then the value of buying an asset with unknown potential is nothing but buying an option on the asset.
5. So now the value can be assessed as the value of a real option with a possible market value that was calculated in points 2 AND 3.
a. We have - Possible Value of the asset and the volatility.
b. We also have the risk free interest rate.
c. Now the tricky ones, the strike price of this option and the expiry time.
(i) The PV of the investment in productizing these products is the strike price. Why? Compare this to a stock call option - What you earn in a call is the difference between the stock price and the strike. Similarly, here the gain of the patent owner is the difference between the revenues and capital cost.
(ii) Now the expiry time is how long these patents are useful. We cannot sit on 4G patents when the market is already preparing for 5G technology. Beyond a certain time, any technology simply loses relevance.
6. At this point we can insert the values in any Black Scholes Calculator.
Alternative
An alternative to this step is to break the 600 patents in several sets of like patents and then assess each set individually. The next step can be to sum them all and use these steps for overall value or consider each set as a separate option and value them one set at a time.
Major assumptions of the above approach -
1. This set of LTE patents will have a market performance similar to historical set of randomly chosen 3G patents from a similar period in 3G's lifecycle.
2. Cost of productizing and other capital costs.
I have applied theory of real options in this case and will try to find out of there are other better methods already used elsewhere. That would form some other post
- Siddharth Garud
Reference:
http://www.cbc.ca/technology/story/2009/07/29/f-lte-long-term-evolution-wireless.html
Following is with the assumption that the potential buyer is going to know everything about the patents.
1. A Patent is an asset that will be used directly or indirectly through applications based on the patent.
2. First step would be to find the directly assessable market based on history. That market is of those products this patent and its extensions can directly substitute.
That is the possible market potential.
The subjective part here is how much one can be sure on this market potential.
3. Next is finding the potential of those products that are not conceivable as of now. This is the tricky one.
(i) One way to approach this is on the basis of historical statistics of patents from the same industry. For example, in this case of 4G, we can take a random sample of 600 patents (or possibly more) from the period when 3G (or any other technology) was a new area of research.
(ii) Now analyze how many of these samples proved to be huge successes, moderate successes and damp squibs. With this as the basis, we can use the same probability on this set of LTE patents (this is a huge assumption). Obviously this is not something that will always work yet if we are going to use history as any indicator then this is one way to follow.
(iii) The next 2 things we can draw from the above sample would be the standard deviation and volatility.
4. Now if we look at this set of patents as an asset, then the value of buying an asset with unknown potential is nothing but buying an option on the asset.
5. So now the value can be assessed as the value of a real option with a possible market value that was calculated in points 2 AND 3.
a. We have - Possible Value of the asset and the volatility.
b. We also have the risk free interest rate.
c. Now the tricky ones, the strike price of this option and the expiry time.
(i) The PV of the investment in productizing these products is the strike price. Why? Compare this to a stock call option - What you earn in a call is the difference between the stock price and the strike. Similarly, here the gain of the patent owner is the difference between the revenues and capital cost.
(ii) Now the expiry time is how long these patents are useful. We cannot sit on 4G patents when the market is already preparing for 5G technology. Beyond a certain time, any technology simply loses relevance.
6. At this point we can insert the values in any Black Scholes Calculator.
Alternative
An alternative to this step is to break the 600 patents in several sets of like patents and then assess each set individually. The next step can be to sum them all and use these steps for overall value or consider each set as a separate option and value them one set at a time.
Major assumptions of the above approach -
1. This set of LTE patents will have a market performance similar to historical set of randomly chosen 3G patents from a similar period in 3G's lifecycle.
2. Cost of productizing and other capital costs.
I have applied theory of real options in this case and will try to find out of there are other better methods already used elsewhere. That would form some other post
- Siddharth Garud
Reference:
http://www.cbc.ca/technology/story/2009/07/29/f-lte-long-term-evolution-wireless.html
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