If I Were King

As mentioned a couple of days ago in our comments regarding the FDA, we need transparency in the health-care field. If any member of the royal household is facing a major health issue, and the physician is recommending a specific course of action, we want to know whether that’s because that specific course is the best possible one, or if it’s because the physician is loyal to the company that sells the device or medication involved because they routinely fly him to Honolulu or pay him to speak at their sales conventions. Worst of all, what if it’s a distant second choice, but the doctor will benefit financially by prescribing it?

Starting today, Park Nicollet Health Services (Minneapolis, Minnesota) is posting all consulting and speaking arrangements between drug and device manufacturers and the 1400 doctors who work at Methodist Hospital and 25 clinics in the Twin Cities. They aren’t posting this in a huge binder you have to ask for at some hidden counter in the administrative wing of the hospital, or filed with some state office, it’s right at this page on their website.

If I Were King, this level of transparency would be universal. We would be delighted to learn that it was universal because the health-care industry saw the need and did this of their own volition, as Park Nicollet has, but we would issue a royal decree if that were needed.

The Child Online Protection Act finally died yesterday. The bill, signed late in 1998 by Bill Clinton, made it illegal to put sexually explicit materials on a website seeking commercial gain, but never went into effect. The bill made it to the Supreme Court in 2004 but was remanded to the US appellate court at Philadelphia. As Mukasey vs ACLU it was dismissed Wednesday without comment.

Although we are certain that participating in creating pornography is likely to be damaging to children, we are skeptical that seeing it has any effect at all. Even if it did, any damage that could be done by exposure to pornography is insignificant compared to the damage of raising children in an environment where censorship is practiced.

If I Were King, the government would not have pressed this case.

Shortly after Wall Street hammered Apple’s stock over health concerns regarding Steve Jobs, the company announced outstanding results for the quarter just ended. Both revenue and net profits were up nicely, at a time when any company turning in improved results is a shock. As always, the stories are mentioning that Apple’s gross profit margin was 34.7 percent, the same as in the prior-year quarter.

This is curious. In fact, this is nonsense. The issue is that the press is constantly comparing Apple to Dell or HP in this regard, but the comparison is silly. What they are overlooking is that Apple’s margin includes both the margin on the hardware, which is probably better than Dell’s but probably not all that much better, and its margin on the operating system, which is probably not as high as Microsoft’s margin on Windows. When Microsoft reports their margin, it’s closer to 85% on Windows. I have no idea what Dell pays Microsoft for an OEM copy of Windows Vista, but though it isn’t anything like the retail price, it isn’t trivial.

On server products, the advantage probably goes to Dell/MS or HP/MS. When a Windows server is sold, the base operating system is in the total to the tune of $500 and up, for five users, on which MS earns their 85%. But there isn’t much reason to buy a real server for five users, so the client buys sets of CALs – Client Access Licenses. Five additional CALs cost about $150, on which the MS margin has to be on the order of 99%.

In other words, the constantly repeated theme that Apple is making dramatically higher margins than their competitors is the result of poor logic and arithmetic skills on the part of the media. As has been said before on these pages, If I Were King, education would be focused on addressing this, and nobody with a high school diploma would be likely to make such an error. We assume that the media would continue to hire only those who have at least that level of education.