These issues do not affect most of my friends in the Unites States, frankly, because they are what would be considered to be high middle-class income earners in stable careers and working at large companies that provide family coverage as a benefit.  It is also true, though, that those friends — should they elect to leave their cushy jobs and form a startup, or move into consulting — will incur risk that they or their families could go without coverage.

This is one of those quixotic situations that often arise when there is no basic guarantee in a society.  Even the upper middle class must consider career and life decisions within the context of health care.  Leaving the warm embrace of your employer to pursue some new innovation is a tough decision, for more reasons than there should be, as a result.  So many employers view their health care packages as an employee retention tool and are not motivated to alter this.  COBRA does nothing to protect workers who leave their positions voluntarily, after all.

Regardless, lower-income families are under pressure in the US.  I posted this in response to a friend on Facebook:

… which is largely rhetoric but is probably true.  How can people who are repressed by the system (limited education, limited time) participate in the debate about restructuring that system?  With 40% voter turnout in recent US elections, we can see this actually impacting the functioning of a democracy in a real way.  The US is presently governed by an elite — much like China, and much like the Soviet Union.  And like modern-day Russia, the multi-billion dollar federal electoral process is now “democracy theatre” as the appearance of leadership is contested by two groups:  one which I will call the compassionate elites, and the other comprised of a group I can only describe as diffident elites.

In any case, and as I said above, the outcome of the US Health Care debate will reveal a lot more about which Elitist group holds sway over the other; or put more succinctly, which of the two groups of Elites is better able to hold in check the corporate interests the finance their electoral campaigns while simultaneously establishing some sort of remedy for the country’s desperately ill system.  The process will enjoy neither the participation from, or support of, the very lower-middle-class and poor majority that the system should benefit the most.

They are too busy trying to survive.

So I suppose it is no surprise that the in-crowd is gleeful about the judgment.  It has all of the requisite keywords to invoke the sort of self-satirizing knee-jerk rejectionism that we have come to expect from the cornball neopop blogosphere types that take the time to type these missives (I can be fairly accused of being one of them, too).

But isn’t it time to progress beyond our cliched fear of Microsoft?  The DoJ hurricane blew past their ranch years ago; the company’s dominance in Operating Systems is now respectably challenged by Apple’s OSX and various flavours of Linux (and, if only in vapour, by Google Android); and their web browser is being resoundingly thumped by an influx of not dissimilar offerings from Firefox, Apple, Google, and even Opera.  The Zune is an also-ran MP3 player next to the iPod, and Windows Mobile has become a running joke in the telecom industry while the iPhone has become the dominant player in a little under two years.  The next penny to drop for Microsoft may well be Enterprise apps, with Office and Exchange as the cornerstone.  If someone figures out Shared Calendaring, my friends, that latter jig may be up but soon.

So it’s probably fairer now to conceptualize Microsoft as the aged, embattled warhorse that it is; as bloated and sweaty as its present CEO; both of them a heart seizure waiting to happen.  With billions in the bank it’s hard to feel too sorry for them, but would we be cheering so loudly if the party on the losing end of this patent dispute was any other company?

In recent months the company has been sued by patent holders and licensors over a litany of fairly benign and long-implemented technologies from instant messaging to Windows Update to  its Product Activation System.  Each of these is a clear improvement without which Windows, an already unusable operating system, would be significantly worse.  And so in a worst-case scenario Microsoft is now hampered from delivering you a higher-quality, more innovative product not due to lack of imagination on the part of its engineers, but due to a wellspring of imagination emanating from patent attorneys and their litigious clients.

i4i isn’t strictly a patent troll, but they’re not the original inventors of the technology either.  They are also clearly using this patenet defensively, to prevent Microsoft from encroaching on their market.  This is really an obstacle for anyone who wants to do complex document workflow automation (and lots do).

We actually need for Microsoft to win some of these disputes.  We will all benefit.  Each sets a dangerous precedent that will affect all comers upstream of these cases, and a patent troll armed with a lucrative victory on something so obvious and derivative of open-standards as the ability to edit custom XML is dangerous to the web as a whole and will create a substantial speedbump to innovation.

So maybe just for a while keep your malicious joy in check when reviewing this case.  Microsoft is presently doing the web a favour acting as a breakwater for all of us.  I’ll hold my judgment until we see how they put their own patents in this arena to use (or disuse).

Many Western technology companies have heeded that call, but have found themselves cast into the rocks on Chinese shores — including companies like Microsoft, Google, Cisco, eBay, and YahoO!  The massive markets just never seem to have materialized in the Orient for these giants, or when success has loomed on the horizon the murky Chinese bureaucracy has stepped in to snatch defeat from the jaws of victory.  Partnerships have vapourized overnight, and (particularly in the case of Cisco) core Intellectual Property has been outright stolen, reverse-engineered, or redistributed.  Perilous waters, indeed.

So it was with this skepticism that my friend Gersham viewed the latest piece of propaganda emerging from our friends in China that we have now reached the new height of 338 million Chinese Internet users — a 13 percent increase since the end of 2008, and just about exactly one quarter of the country’s population.  All of this, of course, seems to have been tabulated and distributed by the slightly inaccurately-acronymed Chinese Internet Network Information Centre (CNNIC) which, by its own admission “takes orders from the Ministry of Information Industry (MII) to conduct daily business.”  In fact, Google “Chinese Internet Traffic” and you’d be hard-pressed to find data that did NOT originate from the CNNIC.  Hmm.  Call me a cynic.

It is likely difficult for most (any) of us to corroborate or even conceptualize these high numbers, but it seems suspicious nonetheless — particularly from a country whose median income is around $3400 and whose Per-Capita GDP is ranked 104th, right behind Armenia.  In trying to substantiate this, once can point to Alexa’s site rankings which currently reveal that 3 Chinese-language web sites rank in the Top 20:  Search Engine Baidu (#9), IM chat and portal QQ (#14), and portal Sina.com.cn (#18).  Sounds good, right?  But look closely at the rankings.  Baidu, an undisputed leader in Search for China, reaches 5.73% of the internet populace, whereas Google.DE (#13) reaches roughly 3% of global internet users while servicing German, Swiss and Austrian users exclusively.  Combine the populations of these three countries and they don’t even add up to 100 million people.

Gersham pointed me toward the Firefox Download Stats, where as of this writing Germans have made 4,948,666 downloads of various firefox versions compared to only 672,972 for China.  Again, Germany has a population of 82Million vs. 1.3Billion in China.  As a control, Americans have downloaded Firefox 7,959,727 times as of this writing.  Do the Chinese really just prefer Internet Explorer?

In January 2009, Comscore measured the Chinese internet audience at closer to 180 Million users, still an impressive 18% of the Internet population.   This site quotes murky Nielsen Online data pegging Chinese Internet Users at roughly 300 Million.  Beyond these heresy reports, empirical measurements are difficult to come by.

So, let’s throw up our hands and try to reverse-engineer the data using published stats.  According to June 2009 data from Comscore, Google has captured 65% or so of US Search Traffic.  This made it the #1 web site in the world, with 157 Million US Visitors in June, according to Comscore.  In the Chinese Market, Baidu has captured 73% of Chinese search, with Google in the Number Two spot.  Yet Baidu.com barely moves the needle by comparison, according to compete.com, alexa.com, and others.. hitting roughly 600,000 unique visitors per month globally.   High-side estimates of the Internet’s penetration in the US peg it at 72.5% of the populace, or about 220 million.  This makes the data on Google’s penetration vs the addressable market reasonably accurate (71% if you do the math).  Following this logic, if Baidu in fact has 73% of China’s purported 338 Million users, it should be ranking as the #1 web site by far, with >246 Million unique visitors per month.  In fact if any of this data were true, then Chinese sites should occupy at least 4 of the Top Ten global web sites.

Whatever your opinion of Compete’s and Alexa’s relative methodologies, it’s impossible to reconcile anything even close to the numbers coming from the Chinese Government.  If that isn’t good enough for you, let’s turn to profits.  While serving what was allegedly the world’s largest internet audience, Baidu appears to be tracking to earn about $500 Million in revenue this year.  Google’s revenue appears to be tracking to about $23 Billion for 2009 with its pithy 157 Million unique visitors.  Any way you slice it, if China’s internet userbase is as large as Beijing says it is, and if Baidu’s market share of that audience is what it’s widely purported to be, then both the number of uniques reported by external traffic sites and the revenues reported by the public company that owns Baidu should be exponentially greater.

These stats seem to either indicate that Chinese do not use search very often, or that there just aren’t too many of them heading out into the wilds of the Internet.  Either way, statistics emanating exclusively from bureaucratic sources within Beijing, particularly those which seem to fly in the face of all other external metrics, are not to be believed.  The thesis of this post is not to suggest that China is NOT a massive opportunity for online properties and other technology purveyors, it is simply an attempt to point out that, like in a lot of cases in dealing with the Peoples’ Republic of China, things are not what they may seem.  Pay no attention to the man behind the curtain.

It has been a year since Apple and Rogers Wireless launched the iPhone 3G in Canada.  It was that summer, in 2008, I unloaded my first-generation unlocked iPhone for a legit iPhone 3G from Rogers Wireless.  One of the benefits of having a carrier-supported iPhone is, of course, supposed to be seamless warranty replacement.  Shortly after I got it, my iPhone began dropping calls and failing to dial out on the network.  I assumed this to be A) a problem with Rogers’ network, B) a firmware bug in the iPhone itself, or C) a combination of both.

I had heard things about chipset problems afflicting AT&T iPhone customers so I assumed this would be remedied in a soon-to-follow update from Apple.  By October of 2008, I had given up.  I called Rogers tech support and was walked thru the usual “wipe it clean and pray it’s fixed” procedure and tried it for two more weeks but no joy, so in November I instigated the phone swap process from Rogers.  The call was short and sweet and all seemed to be well with a new iPhone winging its way to our house.

On the Friday before my iPhone was to arrive, my SIM suddenly stopped working and my iPhone could not connect to the Rogers network at all.  I later found out that this was due to the fact that my phone number had been reprovisioned to a new SIM that was in the box accompanying my iPhone.  Odd.  It was obviously my iPhone that was broken, not the SIM, and I just couldn’t fathom why they wouldn’t just give me a 1-800 number to call to activate the new SIM when it arrived versus forwarding my phone service to a brown box in the back of a UPS truck, leaving me without my phone service for 3 days.  I called Rogers (from my Vonage line) to complain, spent an hour and a half on the phone, and could not get this resolved after bouncing around 3-4 agents.

On the following Tuesday, the replacement iPhone arrived.  I tried starting it up, but it wouldn’t boot.  It had a substantial hardware problem that led to garbage on the screen and all kinds of other garbage, but in effect the replacement phone was DOA.  As I had to go on a business trip that day, I put the new SIM in my old iPhone and left the new iPhone for a week or so before I tried it again, this time putting the replacement thru all kinds of hardware resets and software reloads.  I could not resurrect it from the dead despite hours of trying.

So I called Rogers.  Again.  After two hours bouncing around various agents in various departments, I could not get an agent to take responsibility for my problem, instead each agent dispatched me to another department as I (admittedly) became increasingly irate.  One agent accused me of lying, and/or not knowing what I am talking about.  Finally I threatened to QUIT Rogers, switch to Telus, and sue them for breach of contract — I was transferred to a magic save department where I met a very nice lady who calmed me down, promised to solve all of my problems, and who would call me the following week which was, now 7 weeks after the Odyssey began, Christmas.

Needless to say, she never did call back.  Never solved my problem.  Probably got laid off.  Might be working for Bell Canada right now, for all I know.

Next I began to receive a torrent of threatening letters demanding that I return my old, somewhat functioning iPhone or I’d be charged $780.    I called Rogers again in January trying to resolve the issue, but to no avail:  Rogers Wireless wouldn’t take the badly broken replacement iPhone back without also sending my other one, leaving me phoneless.  I gave up after the best I could do was an agent telling me I had to send BOTH iPhones in one shipment to their call centre.  Fuming, I waited another few days to call back.

Eventually on my next call,  an agent relented: I kept the semi-working iPhone, sent back the badly broken replacement iPhone.  I packaged up the replacement phone and sent it back, recording the shipping tracking number from UPS.

Then the predictable happened.  They charged $780 to my card.  I was furious, but sugar-coated my attitude and called back AGAIN to ask for a refund.  After bouncing around to various departments, each complaining about the slowness of their computers, they could not track the whereabouts of the iPhone I had returned, despite the fact that I could even tell them the name of the signing agent who had received the package.  I nearly hit the ceiling.  I threatened a complaint to the CRTC (which, in fairness, I have every right to do).  Finally someone agreed to help me.  One quirk:  They couldn’t refund the $780.Instead I got a credit — in effect I was loaning Rogers money — against future use.  A compromise that irritates me, but was under the circumstances acceptable.

Now it was March.  By my logs of various telephone calls to Rogers, I had now spent about 9 hours on the phone with Rogers attempting to address a single issue spanning more than 6 months.  I was so exhausted with the process that I accepted the neutrality of being exactly where I was technically, and further behind financially, than when the problems began — with an iPhone that didn’t fully work and with my wallet $780 lighter but an account credit.

It wasn’t until late last month that I mustered the courage to call again and try to get a new replacement iPhone.  I had assumed that these processes, immature at the time I first endured them, may have seasoned and smoothened with time and experience.  I called again, had a very pleasant half-hour call with an agent, who whisked me a new iPhone 3G toot sweet.  As before, my phone service was disconnected for a couple of days after they shipped the replacement phone, but by now Stockholm Syndrome was taking effect and I was becoming numb to the varied mistreatments by my captor.

The very same day the new iPhone 3G arrived, I cracked open the box, dropped in the new SIM, zeroed my old iPhone, and boxed it up for shipping.  UPS picked it up that very day, May 28, 2009.  I expected to hear nothing of the issue further.  According to the UPS tracking data, the package arrived the following week, on June 6th.  On June 14th, Rogers sent me a letter threatening to charge me $730.

I cannot fathom that within 8 days, Rogers could not process and acknowledge the receipt of my RMA’d iPhone 3G.  I furthermore cannot fathom that when they do overcharge you due to their own error, they cannot refund the excess back to your credit card (which is how I pay for my phone service).

Rogers is a company clearly hampered by its own hugely restricted billing, provisioning, and customer service systems.  Ted Rogers, five weeks before his death last year, spoke to an audience marshalled by the local YEO chapter, which I gratefully attended as a guest of Mario from ShowTime Tickets.  Two thoughts of Ted’s permeated his frailly-voiced speech that day.  He said, of customer service, that “the secret to good customer service is always saying yes” and that his success as CEO was directly tied to the number of layers that existed between him and his customers — the fewer the better.

I know that it’s difficult dealing with the kinds of customers iPhone brings to the table and the scale of operations necessary to support the volume that a device like the iPhone can generate for Rogers.  Not easy.  But I wonder what Ted would think after reading this story?

These competing cliches have become a touchstone of sorts in the case of a certain recently dethroned uber-goalie, and a number of local Canucks bloggers are hot-under-the-collar in response to journos insisting that the team’s only path forward is moving Luongo out to free up cap space.

It was with the goalie-gets-you-there hypothesis that many Canucks fans simply assumed that Roberto Luongo, with his ostensibly justified high salary, made it a foregone conclusion that the Canucks could go deep this year (and last year) into the playoffs.

But is it true?  Can you buy your way deep into the playoffs by splurging big on a marquee goalie?  I decided to test the theory. 

Here are a couple of quick tables that map out goaltender salaries, starting with Conference Finalists:

Chicago Blackhawks
	Starting Goalie: Khabibulin, Nikolai AGE:  35 $6.75 Million	Backup: Huet, Cristobal AGE:  32 $5.625 Million
Pittsburgh Penguins
	Starting Goalie: Fleury, Marc-Andre AGE:  23 $5.00 Million	Backup: Garon, Mathieu AGE:  30 $509,000
Detroit Red Wings
	Starting Goalie: Osgood, Chris AGE:  35 $1.417 Million	Backup: Conklin, Ty AGE:  32 $750,000
Carolina Hurricanes
	Starting Goalie: Ward, Cam AGE: 24 $2.667 Million	Backup: Leighton, Michael Age: 27 $600,000

… and here’s another showing the dropouts from the Conference Semifinals:

Vancouver Canucks
	Starting Goalie: Luongo, Roberto AGE: 29 $6.75 Million	Backup: Labarbera, Jason AGE:  28 $461,000
Washington Capitals
	Starting Goalie: Varlamov, Simeon AGE: 20 $155,000	Backup: Theodore, Jose AGE: 31 $4.5 Million
Boston Bruins
	Starting Goalie: Thomas, Tim AGE: 34 $1.1 Million	Backup: Fernandez, Manny AGE: 33 $4.333 Million
Anaheim Ducks
	Starting Goalie: Hiller, Jonas AGE:  26 $1.3 Million	Backup: Giguere, JS AGE:  31 $6 Million

Here’s what may have changed:  with today’s salary cap consciousness, overspending on a goalie means that it becomes more challenging to build a team in front of him.  This is a reality which, as I pointed out the other day, is hitting Gillis in the face at the moment with the Sedins asking for a fortune and more than 10% of the team’s salary budget tied up in one player, Roberto Luongo, and another big chunk presumably being allocated to The Twins.

Perhaps more interesting than the above table is this chart I whipped up (covering the regular season, 2008-2009) which shows that splurging on goalies doesn’t necessarily deliver absolutes either:

What’s the lesson from all this data?  First:  clearly, individual salary is not entirely predictive of individual performance.  Second:  When you account for outliers like Chicago, Detroit and Carolina, there is a slight inverse corresponence to goals against and goalie spending (ie. you get scored on more when you spend less on goalies) for NHL teams.  However, the margin of difference is only about 20%, and this year four of the six biggest goalie spenders were gone within the first two rounds.  Only Chicago (which is extremely top-heavy on goalie salary) and Pittsburgh (at $5.5M) remain among the big-spending playoff teams.  What makes the difference at the top end?  A hot rookie.  Or, in the case of Detroit, an underappreciated veteran with a bad agent.

Chicago found itself in a fortunate position this year with a fairly low player salary budget (so many rookies and sophomores) that it could invest in fairly known quantities in Huet and Khabiboulin.  That’s depth that may be required to take them through the next two rounds in the playoffs, and it is a strategy that is quite unique to the NHL — but shows that Chicago is the first team to truly embrace the cap and turn a limitation into a key advantage.

So for the playoffs this year, there’s a really interesting opportunity to see which strategy prevails.  What does this mean for the Canucks?  As the very sage Ben Nevile, one of my commenters pointed out the other day, Schneider could be the difference — but for now, he’s very much a wildcard.

The Canucks could indeed trade Luongo if Schneider were to make a Cam Ward-ian appearance at the beginning of next season, and this could provide the team with an immense advantage overall … but until then?  Gillis is hamstrung, unless he can throw together a deal to move Luongo and get a veteran lower-priced goalie in return as a part of the package, which is quite possible.  But few teams have the cap room, and you’d hope to move him to the East Coast so as to prevent having to deal with him on a routine basis all season long (I doubt very much he’s interested in moving to Edmonton anyway).

The major lesson of the above analysis, therefore, is that a goalie on his own might get you through a season — but not the playoffs.  That takes a broader depth chart, thanks to video preperation, off-ice scoring strategy, and the isolation of a goalie’s weaknesses that emerges from playing him 6 or 7 nights in a two-week period.  Had Luongo not been injured and had such a slow recovery when he did return, I’m sure he could have propped the Canucks up to a league-leading points total … but with modern-day goalie-busting techniques, such as he and Varlamov felt in their respective final games, teams can no longer (if they ever could) ride the goalie through the playoffs.

The Canucks in particular are at a dangerous precipice between the pipes… but from threat comes opportunity.  Do the Canucks trade their best player to address both?

Below is a chart on several key players, some relevant data, and what I think I might try to do:

	Roberto Luongo Age: 30 Salary:  $6.75mm Expires:  2010 W-L:33-13-7 GAA: 2.34
It becomes quite difficult to solidify a reputation as the best goalie in the league when you continually play for dog teams that can’t perform in the playoffs.  This team (and every team you’ve played for) leans far too heavily on your unique talent but east of Cambie street you get very little respect in this league.Giving you the captaincy (even without the C sewn on) was a bullshit PR move and could only have served to cause you to lose focus and get off the bead of what it is that you do so well.  Get back to being “just” the greatest goalie ever, stick with us through some changes, and for emotional balance leverage the two guys you have in your own back yard that have lots of mental toughness and carried weak teams through the playoffs:  Richard Brodeur and Kirk McLean.  The armchair GM would be happy to hire them as consultants to focus on the mental aspects of your play.
	Mattias Ohlund Age: 32 Salary:  $3.5mm Expires:  2009 25 points
I think we’re going to lose you to an East Coast team in bidding this summer. Vancouver fans don’t respect your contribution enough.  I think you’ve had a tough couple of years trying to fit into the Vigneault system, which has required you to take too many penalties and lose focus from your offensive play.I don’t want to lose your grit, but the budget’s tight.  I’d like to sign you to a multi-year contract at your present salary, but I doubt you’d go for that considering who’s been calling.  So I would hope to keep you here with a two-year at $2.5mm — and it’ll be hard to find room under the cap for that.  You’re a franchise player.  Stay here 3-4 more years and we’ll retire your jersey, give you a shot at a cup with some rebuilding, and you can play in front of the home crowd for Sweden in 2010.
	Sami Salo Age: 35 Salary:  $3.5mm Expires:  2011 25 points
What, are you made of porcelain?  We need you to play a whole season.  Please ensconse yourself in bubble wrap and suspend yourself with bungee rope in a lcoked room between games.  We’d like the keys to your Porsche — we’ll be sending a driver in an armoured, padded vehicle with a 7-point safety harness to pick you up for games from now on.If you can put together a full season you’re awesome — but we can’t keep backfilling you.  Fans love you.  I like saying your name with a Squire Barnes lisp.  What the hell: you can’t go anywhere, we’re not trading you… get out of my office and back to the gym (though please pick up some tensor braces and make sure you stretch thoroughly in order to prevent injury or strain).  Please do not buy a Segway or any two-wheeled vehicle.
	Taylor Pyatt Age: 27 Salary:  $1.575mm Expires:  2009 19 points
You are six-feet four, and you weigh 235 lbs.  In today’s NHL that is neither lean enough to be fast, nor thick enough to be tough.  You’re a UFA this summer.  I don’t understand why Vigneault continues to throw you on the ice in critical situations — end of the game, power plays, penalty kills, etc.  You are almost always behind the play.You were a healthy scratch several times in the past two years.  You are being given chances to showcase your skills (probably because we were hoping to trade your ass) but you’ve really let us down.  19 points in 69 games, especially given the guys you’ve played with, means you haven’t been a factor at all.You have NO grit, speed, nor puck-handling dexterity.Happy to let you go — but if you want to stay here 1) figure out what kind of player you are, 2) hire a personal trainer and develop this summer, and 3) we’ll pay you $1M on a one-year contract.  Sorry about your tragic loss, but this is a business.
	Mason Raymond Age: 23 Salary:  $833.33K Expires:  2010 (RFA) 23 points
In your case, I don’t think the stats have told the story.  You’re a hungry, fiery player with grit and I feel that AV has completely underutilized you.  For a 6’0 guy to be the team’s fastest skater is impressive.  You’ve gotten your feet wet in the league, you played your way onto this roster, and you’ve tasted the playoffs.  Now you need to play your way up to the second line.  I think you could be huge as a forechecker and your hands are awesome.This is your sophomore NHL summer.  You’re only 165 lbs. soaking wet.  Would like to see you bulk up without losing speed, just to prevent you from getting knocked around too much.  Work on the upper body, not just the legs, and eat a sandwich once in a while.  You’re great kid, now get out of my office so I can deal with the next guy.
	Willie Mitchell Age: 32 Salary:  $3.2mm Expires:  2010 23 points
Hockey loves the hometown boys.  Port McNeill is pretty close to Vancouver.  Check.OK somebody liked you last summer and gave you a pretty rockin’ deal despite a weak season.  This year you did a lot better, so she time is right to keep that momentum and own the zone.  At times this year I watched you and you seemed to have your head in the clouds, crossing over inexplicably and floating the puck when a slap-pass was required.  Your turnover stats look pretty bad.  You are, though, a big part of the breakout.  If Ohlund goes this summer, you’re a huge part of the defensive corps and the younger kids will be looking to you for leadership.  At times you seem disinterested in defensive play.  Get angry in September and find your grit.Step up, and we’ll renew next summer — no probs.  Want you to finish your career here.
	Alex Burrows Age: 28 Salary:  $2mm Expires:  2010 51 points
You have played your way onto every team throughout your career.  With 52 points in 82 games you have really delivered in 2008-2009, particularly since AV has not always played you on top lines.  You’re probably the fittest player on the team, and a role model for guys making twice your salary.Your unique attribute is your work  ethic.  You need some bulk up top, because when you eventually settle into second line left-winger status you’re going to get tossed around like a bean bag.  I think you’re going to look like the bargain of the century in two years.  We’ll get you a speedy centre to get things going.
	Kyle Wellwood Age: 25 Salary:  $998K Expires:  2009 27 points
I’ve known and played with a lot of guys like you who never got the chance to play in The Show.  You’re immensely, naturally gifted as a player but as a teenager it always came so easily to you that you never really developed a work ethic.  After a few years with the Leafs you became a guy constantly on the bubble, and nowadays that is what is driving you.Wake-up call:  We signed you and put you on waivers (for no really good reason) last year after you failed the fitness test, and nobody even called.This is it.  I’ll sign you right now for $800K for a year because I know I’m the only guy who’ll take a chance.  You’re still on the bubble.  We saw flashes of brilliance this year, but you’re still falling behind.  That’s OK if you use this summer as your time to train like crazy, make me a liar, and come back to camp in lean and mean shape with some speed that can match those hands.  Keep skating all summer.
	Mats Sundin Age: 38 Salary:  $7mm Expires:  2009 28 points
You’re no Neidermeyer.  You’ve proven that you can’t sit out half the season and expect to compete in the NHL.  You came back from semi-retirement old and slow and not nearly pissed-off enough.  You hoped the Sedins and Luongo would carry you to your ring but we did not get the leadership on the ice I’d expect to see from a guy who’s been a consistent 70-80 point-getter for 10 years — and one that we paid $4 million bucks for.So yes, this is goodbye.  There’s no role on this team for you, but I think you knew that.  I always knew you were a summer rental.  See you at the retirement press conference, and enjoy the flight back to Sweden.  And when the Rangers call?  Don’t do it.  You’ll smear your glorious Leafs legacy (choke).
	Ryan Kesler Age: 24 Salary:  $1.75mm Expires:  2010 59 points
When we originally signed you, we thought you were the next Trevor Linden.  It hasn’t exactly been an easy path, and so you were often on the bubble.  This past year you really shined.  What I’d like to see you deliver is a 75-80 point season in 2009/2010 as a center.  If so, you could be our future and we’ll hit you with a contract at least as sweet as your wild-eyed three-year, $2.475-million entry level contract a few years ago.Time to step up and deliver on the promise that we saw when we passed up Mike Richards and Corey Perry for your ass.  I’d like to think you could be the captain of the team but not yet.  One more season like this year’s and we’ll talk about it when you’re up next sumer.  You play better when you’re hungry.  You ought to be a second-line centre by now.
	Kevin Bieksa Age: 27 Salary:  $3.75mm Expires:  2012 43 points
This was the best year of your career, despite a couple of injuries that had us leery.  You’ve showed real toughness at times and delivered 43 points offensively which made you the top-scoring D-man on the team.We have however noticed your defensive play suffering.  You’ve made some brutal bets on the pinch and lost, creating momentum-killing 2-on-1s and leading to some highlight reel goals for other teams.  Luongo can only do so much to cover for a defenseman who’s not even in the play.  Additionally, while we like your grit, we hate your timing.  Pitchforking that guy in Game 5 vs. Chicago with 6 minutes to go almost definitely cost us a Game 7.Clean it up and work on your D game and you’ll be worth every penny.
	The Sedins (H D) Age: 28 Salary:  $3.58mm Expires:  2009 82 points each
You each got 82 points this year — one each per game — with no injuries.  Once again, you were absent for much of the playoffs.  You need to understand that people will key in on you and work with the Right Winger we give you.  Because you are a package deal, any team that signs you to a big contract is going to mortgage their whole future to do so.  I know the Rangers will call. Anyone who can sign you both won’t be able to field a very good team beyond your line.We have invested a lot in you and consider you to be franchise players.  I would match any offer up to $4mm each and for 3-4 years, but above that I’m pretty hamstrung by trying to surround you with the league’s best goalie and a strong D.  But ANYONE who signs you at your presumed asking price, given that there are two of you, will be challenged to surround you with a talented team.
	Alain Vigneault2007 Jack Adams award winner 2007/08: 39-33-10 2008/09: 45-27-10
Some coaches are able to work their magic in the locker room, some do it by running perfect practices, and others do it behind the bench.  In the regular season great practices, and solid locker room and off-ice leadership keep teams healthy, prepared, and in-the-game.  In the playoffs, though, coaches do their work behind the bench.As this was your first career NHL playoff run as a coach, I guess we can’t be too harsh with you for losing.  I have to be honest — watching what happened in Chicago, where the Hawks clearly changed the entire complexion of the play without any adjustment or response from the Canucks — I wanted to fire you.  But then, reflecting on the stats of the regular season, I think we just need to develop you and get you some help.Speaking of which…
	Trevor Linden Requires no introduction.
Hey Trev, ‘sup?  Feeling refreshed after a year off, freed from the shackles of watching Naslund flail as a Captain and watching the NHLPA eat itself alive trying to maneouvre with that weasel Gary Bettman?We miss you.  Fans still show up to games wearing #16 jerseys.  You cast a long shadow, my friend, and rumour from some former Canucks players has it that even thought you didn’t wear the “C” these last few years in Vancouver, you were.  Suffice to say:  You cast a long shadow.Within the next 16 months, Ryan Walter or Rick Bowness will be moving on.  I’d say you’re a shoo-in for Assistant Coach.  The salary sucks, but face it — you bleed blue and green.
	Cody Hodgson Age: 19 Salary:  $875K Expires:  2011
I think we made the smart decision growing you slowly this year, sending you to the Battallion, letting you play on Team Canada in the Canada-Russia series, and now pulling you up to the Moose.  Your play has been exceptional — now you know what it’s like to spread your wings and rock the ice and be a dominant force.Next season please arrive at camp prepared to play in the NHL.  Speed and dexterity are your biggest assets, and you’re big enough not to get tossed around.  Toughness and grit will have to come over time.  You’d make a great roommate for Burrows — only you’re a little more talented than Burrows — because he’ll keep you focused on your fitness and work ethic.  Don’t let this go to your head, we’ll give you a lot of PP ice time next year, probably playing on the Right Wing.
	Marian Gaborik MINNESSOTA Age: 34 Salary:  $3.2mm Expires:  2009
Wanted:  RIGHT WINGER who can hold his own with the Sedins, stand in front of the net when he has to, and wire shots top-corner while hapless defensemen chase the Swedes around in the corners.  Hey Marian, know anybody?Oh that’s right… your pal Pavol is on the Canucks, hit 53 points, and will be here til summer 2010.  Unless of course we can’t attract you as a free agent this summer, in which case we’re going to trade his ass (he nets a $4 million salary).  Since your injury makes you a bit of a risk, I’ll throw $3.5mm on a one-year contract to you but would discuss anything up to $4.0mm on a two-year deal.  If the latter, then you’ll be riding to games in the bubble van with Sami Salo.We’ll try you with the Sisters, and if that doesn’t work out I’m sure you’ll enjoy spinning around the ice with Demitra.  And hey, Willie’s here too… you remember him?
	Ossi Vaananen Age: 28 Salary:  $1mm Expires:  2009
I checked my magic 8-Ball: “future hazy”.  Will re-sign for 2 years at $875K.  Otherwise, seeya.  Thanks.  See you in September.  PS – there are too many vowels in your name.
	Alexander Radulov Age: 22 Salary: $919K Expires: 2009
Ok now, if ever there is a Russian player destined for first-line greatness in the NHL, it is 22-year-old Alexander Radulov.  He is, though, the centre of a huge controversy between the NHL and the Russian Kontinental Hockey League.  Last year, though he was signed to a pithy $1mm contract with the Predators, he ended up inking a three year deal worth $13mm with the KHL’s Salavat Yulaev Ufa.  This contract was signed days before a treaty agreement was reached between the NHL and KHL regarding transfer of players. The Russians view this as payback for the yanking of Ovechkin and Malkin, among a host of others, into the NHL from domestic clubs. What’s happened to the Preds now is essentially what might have happened to the Canucks had they not been able to lure Bure overseas after picking him so many years ago.  This summer, the stage is set for a Battle Royale between the NHL and the KHL’s Alexander Medvedev — the outcome of which might mean Radulov’s return to the National Hockey League as an unrestricted free agent.  This will be THE story of the summer.
	Maxim Afinogenov Age: 29 Salary: $3.5mm Expires: 2009
Building on the Russian Right-Winger theme:  Hey Max!  How would you like to play with the twins?  I know things have been sucking in Buffalo lately.  You need a change of pace!  Your scoring is off, but I think you’ve got potential.I’d throw you a three-year, $3.0mm bone to head over to Vancouver where the ladies will love ya, the Sedins will pass to you, and you can head back up the roster to the first line and net around 75+ points.  Sound good?  Sign here.

Going back over this post, I have committed the Canucks to around $50mm, give or take $2mm.  For instance I’d obviously be happy to say goodbye to Pyatt were Afinogenov to be lured to the team.  But with a cap of $56.7mm next season for team salaries, that leaves very little room and I have filled 15 of 23 roster spots.

According to HockeyBuzz O’Brien, Bernier, Rypien, and Hansen are also key free agents this year.  They will be demanding salary bumps and presently the four of them account for about $4.5mm all in.  Add to that Edler’s $3.25mm salary, Demitra’s $4mm, and various odds & ends, and that’s another $9mm unaccounted for in my planning.

The reality is that the Canucks are not going to be able to strengthen the roster substantially from within the Free Agency market.  The youth movement, as Chicago has evidenced, where underpaid young players overperform, is where teams get a solid strategic advantage these days. This places heavy emphasis on Hodgson to crack the lineup and be a dominant player in 2009-2010, as the Canucks don’t have much else under development.

That said, a couple of things happened this past year:  1)  Salaries inflated across the board, but teams are seeing revenue decline, and 2) The economy collapsed, and the NHL started talking about lowering the cap in the next few years.  This will see teams being far more conservative in their offers to Free Agents, which will be enhanced by the frankly startling diversity of talent that is set to hit the market in June.

So:  Will Ohlund take a pay cut to stay with the only NHL team he has ever known?  Will Bernier (and other teams) recognize that he’s not worth $2.5mm yet?  Will Hank and Daniel bankrupt the team that has developed them into Top 20 players by making a big cash grab, or would they like a shot at the cup?  If they reach for a $6mm salary each, as some suspect, the twins and Luongo alone could account for more than one third of the team’s salary cap at nearly $20mm.

Mike Gillis has a real problem.  If few or none of these situations plays in his favour, then I suspect it’ll be 5 or more years before they have a team in contention… and they’ll have to do something the Canucks are rarely successful at doing:  developing a group of players from the draft into top-line players right away.  It could be a very long winter indeed, even by Vancouver fans’ standards.

… all of which underpins the fact that, strong or not, this was probably Vancouver’s best chance at a Stanley Cup for the past 15 years, and at least the next 5.

Now that the Canucks are on the downward slope of the coaster, cruising past a few of the top teams in the league and looking at a bona fide winning streak, they need to remember the fans who supported them in getting there with a League-record 247 sellouts and the faithful purchase of a succession of horrifyingly ugly jerseys and fan paraphernalia. All of the money spent on these tickets, jerseys, and ball caps goes to support the exorbitant player salaries that players continue to demand (even journeymen like Alexandre Burrows – $2M?) even amidst what could be one of the greatest economic declines of the past 130 years.

Fortunately, there is a simple, no-cost way to send some of the love back to the fans who carry their home teams so far.  A trend is  slowly sweeping the hockey world that I think needs to take hold in Vancouver — a city that has not won a cup in the modern NHL and for nearly a century, and in particular a city that suffered through a terrible mid-season slump that even now threatens to cast the team out of cup contention with one of the highest pay rosters in the league.  This would also be a wonderful addition to other teams in the NHL.

When I was playing in Europe a few years ago it was tradition for the home to to salute the fans after the game.  Some would rather elaborately go back to the dressing room, don different warmup jerseys or remove their team jerseys, and return with their kids families to the ice to perform a “dance” of sorts for the fans… others would line up arm-in-arm and “sweep” the ice.  More simply, some just gathered at centre ice and lifted their sticks in a simple salute to their loyal supporters, most of whom are not anxious to leave the stadium early at the end of the game (some photos of the ERC Ingolstadt Panthers, which feature local boy Doug Ast, are below).

The result is a greater sense of cameraderie and family, but there is a deeper message here:  one of mutual respect, appreciation, and shared exhileration.  I realize that the lifestyle of a professional hockey player is difficult and challenging:  friends who’ve done the job are drained and spent for most of the regular season given the hectic travel and playing schedules.  As those of us who pay fortunes to play the sport appreciate, though, anyone who gets paid to do something so special as play hockey is priviledged.  It is vital to the health of the sport (and the long-term sustainance of those lofty salaries) that players feed the system that supports them.

Minor league teams like the Evansville Icemen have taken to saluting their fans now… a great way to support fans and teach young players respect for the institution of hockey.

And since a couple of seasons ago, the NY Rangers have paid tribute to their fans after each game with a simple salute.  You’ve got to admit, it just feels a little bit good to see this.  If players complain that certain arenas are a little quiet around the NHL, especially when compared to smaller but far more boisterous European arenas, perhaps it’s because the players never return the support and acknowledgement that fans give to them? Is it harder to hate a player who’s slumping when you’ve seen him skate out onto the ice with his new baby in his arms?  Do you feel as a fan like you’re more of a part of the big hockey family when there’s greater interaction with them in this manner?  The answer to all of these is “why wouldn’t you?”

So really, is it such a difficult thing to give the fans a little salute after the game before heading to the bike?  The Washington Capitals’ Ted Leonsis is a particularly enlightened and accessible owner … perhaps he’s a guy who could exhibit some leadership here?  Come on, players… let’s show the fans that the respect is mutual.

Every year, beginning around this time, trucks shunt around cities and visit every household in North America, and indeed most of the world, depositing these 6-7lb. volumes in stacks as an edifice to a pre-internet era.  Small businesses waste thousands of dollars each in perfecting their ads and emplacing them in a book that, nowadays, most of us will never demean ourselves to open.

There is substantial waste in this business:  whether it’s the energy expended in physically delivering these books to your doorstep every year, or whether it’s the paper (usually recycled — but that still uses energy) that could go to other uses it’s hard to ignore this big yellow hunk of tree when you trip over it while fumbling for your keys — twice a year in some cities as there’s now competition.

Us New Media types like to portray the Yellow Pages business as an anachronism — an embattled dinosaur searching for relevance in an era when we can Google ’til we puke to find the things we need.  Since this is 2009, a Facebook group has emerged, rather unambiguously called “The Yellow Pages Must Be Stopped“, to demand that the industry adopt an “Opt-In” practise.  I personally have not used a Yellow Pages for anything other than as a monitor stand since the last millennium — except when I was once desperate for a Pizza in a Long Island hotel room.

But unfortunately, the Yellow Pages business is not yet the death march that the Web 2.0 kids have hoped it would become.  … This may say a lot more about the new media of web, telephony, and mobile and their capabilities than it does about the old medium of schlepping giant books door-to-door for punters to thumb through.

For one thing, the Yellow Pages is still the number one tool used by consumers to find local business; the industry continues to forecast growth in the bellwether US marketplace from $10.3 billion in 1996 to a projected $18 billion by 2010 — yes, some of their revenue comes from online, but that number is pegged at between 25% and one-third.

Oh.  And people still (gasp!) turn to their Yellow Pages more frequently than anything else for finding products and services that are local to them.  According to research released a couple of months ago from Knowledge Networks, nearly half (48%) of consumers report print Yellow Pages as the resource they turn to most often for information on a business or service, and more than three-quarters (77%) use the print Yellow Pages overall.

As you would expect, age represents the greatest cutoff point.  The print books are for the olds:  54 percent of respondents over 35 years old said they prefer the Yellow Pages, compared to 29 percent of 18- to 34-year-olds.  I would also hazard a guess that the dividing line dissects social class and educational background as well.

So it might be a little bit early to plan the funeral for the dusty old Yellow Pages, though the companies that produce them are clearly being forced to diversify their product offerings and revenues.  They’re also adapting new standards, such as the shift to recycled paper and soy-based inks.

The Kelsey Group, a Research firm which services the Yellow Pages industry, does forecast turbulent waters ahead for the Print business.  This cut comes from their core base of advertisers, small businesses:

Print Yellow Pages is now in a challenging situation … overall, the accumulated data show small and medium-sized businesses’ spending on advertising has dropped, and the distribution of ad spending by bracket appears to have deteriorated. The assessments of the effectiveness and return on investment performance of print Yellow Pages are also weak. There is strong sentiment to reduce print Yellow Pages spending, and advertisers no longer view category position as a sufficient reason to maintain their current spending levels. In broad terms, SMBs that advertise in print Yellow Pages tend to be more consumer-oriented, established businesses. As a relatively expensive medium, Yellow Pages has lower uptake among younger, growing firms. These findings suggest directory publishers have work ahead of them in reestablishing their value proposition to small-business advertisers, particularly as these advertisers seek partners to help them find customers through nontraditional channels like the Internet, voice and mobile.

Google is not yet good at selling or positioning truly local advertising in scale.  In fact, there is not a single substantial advertising network pursuing this opportunity at the moment:  the problem isn’t in building the technologies that match advertising to your locale — the problem is in having a customer acquisition and sales engagement model that cost-effectively pulls in the mom & pop businesses that are the bread and butter for such an advertising network.

What the Yellow Pages is learning is that perception is their greatest enemy.  While surprising numbers of people still use their dead trees to find services and businesses, their advertisers are pulling out.  Other forms of advertising (even local newspapers) are more trackable and accountable than a static ad in the Yellow Pages that changes, at best, once per year and so there exists a greater perception of value in these.  Ironically, even though it’s still reaching customers, people are starting to realize that for most businesses the Yellow Pages isn’t cost-effective.

The real problem is the lack of a viable alternative.  This is actually where the Yellow Pages businesses stand to benefit.  They practically have a first-right-of-refusal in the small business advertising game already.  They have a scaled-out sales force and a revenue model that supports them — and, if it wasn’t already patently clear, a mandate to protect that structure — therefore they can cost-effectively engage with these small-scale advertisers.

What the Yellow Pages industry needs to do is sell more SKUs.  Today they sell advertising in the printed publication, as well as a range of services within their freestanding online directories.  In fact those Online Directories are #3 behind Search and the Printed Directory for how people find local businesses.  But that ain’t enough.  They need to become advertising networks.  They need to engage with the market of local bloggers, like Vancouver’s own Miss604, and give them advertising inventory that is relevant and can be targeted to their local audiences.

In other words the Yellow Pages businesses need to turn themselves inside-out and, instead of attempting to divert everyone into their silos and cathedrals, free their advertising to integrate with the wealth and breadth of the bazaar.  Locally-focused content sites, which today are starving because the best they can hope for is directly-retained advertising revenue or Google Adwords, could use the help — and in return they stand to generate substantially greater advertising exposure at far less cost than the online yellow pages businesses are attracting today.

It’s a simple shift but one which, I suspect, will have difficulty gaining traction within businesses that emerged from the Incumbent Local Exchange Carriers (Ma Bells) and which have inherited much of their managerial culture.

But there is a breakaway business opportunity here.  If they can make the shift then I believe the Yellow Pages can experience their third renaissance — and avoid the death by a thousand cuts that awaits them from environmentalists, web 2.0 kiddies, the expiration of their primary demographic, and online media empires alike.

Nortel hits the skids

Om has a piece today written by Venture Capitalist Allan Leinwand asking whether Canada should bail out Nortel.  He asks:  “But is preserving the country’s technological heritage reason enough to spend millions in taxpayers dollars?”

I think that the answer to the question is contained within the question.  There is no such thing as technological heritage … only a technology’s future.  Once a company has ceased to innovate with effectiveness, market forces must be allowed to run their course.

Nortel, whose turnaround CEO Mike Zafirovsky appears to be a bit of a jet-setter, was a global source of technical innovation for most of the last century, peaking in the 1980s.  Its DMS line of switches grew to become the dominant means by which incumbent local exchange carriers rolled out circuit-switched voice networks; and the means by which long-distance companies expanded their reach globally. 

This gave the company a lot of cash to throw around, chasing R&D with aplomb, but it wasn’t spent wisely and efforts to embrace IP were insincere and too little too late.  What Nortel failed to see coming was the enormous destruction of value that would occur when Voice became just another application on IP networks — and the opportunity to build massively expanded value by building new applications over that infrastructure.  Even as recently as a few years ago Nortel has been tremendously innovative, however their solutions have failed to reach into the marketplace as they were targeted at a single customer group — the incumbents — who themselves are flailing and sputtering.

They also have a broken corporate culture.  This happens when organizations get fat and lazy … and political.  I watched that culture attach itself, like a parasite, to Cisco in the late 1990s as we were hiring entire teams from Nortel and moving them to North Carolina and San Jose.

The issue of a bailout should be (but isn’t, since the Canadian taxpayer is already subsidizing the company’s operations to the tune of $30M) irrelevant:  Nortel has strong market and asset value still and should not need it.  The company suffers from the burden of expectations, both of the marketplace and of irrational shareholders; and from the criminal efforts of loathsome executives who tried to feed that beast rather than confront reality.

When AOL’s executives realized they had an overvalued asset with little-to-no real growth prospects, they limpet-mined themselves onto a depressed company with unrealized value.  That’s what Nortel could have / should have done several times in the past 15 years, but didn’t.

The chalice of innovation in telecommunications in Canada has passed on to RIM (neither of whose founders ever worked for Nortel — a rarity in the technology industry in Canada!).  Is the company wobbling simply as a casualty of the current economic cycle, or because of a deeper cancer and an endless stream of financial scandals?  Would $30M in investment be better spent on Nortel or on RIM, in the long term?

My guidance is: embrace the bankruptcy.  It’s an opportunity to restructure the business, re-orient the strategy, clear out the dead wood, and reset irrational expectations.  Nortel could yet again be an invigorating business, but shoring up the business that it is today is no way to get there.  In the meantime, Nortel has served its purpose in stimulating innovation in Canada and acting as an apprenticeship program for our country’s technology leaders.  Let it run its natural course.

Falling Apart?

This just in:  Vancouver has been ranked fourth on the world’s list of least affordable cities.  This is well ahead of cities like Manhattan, San Francisco, London, Paris, and Hong Kong.  As most rational people know, the city’s thundering real estate market has been bolstered by rampant speculation and constant construction of new condominiums.. but salaries, and the city’s economic development, have not kept pace.

The survey quoted in the article cites research indicating that the cost of housing in Vancouver is massively disproportionate to median salaries earned by its residents, specifically when compared to other cities around the world.  The median house price in Vancouver as of the time of the survey is 8.4 times the median income — 8.4 years’ average income to purchase a house, compared to the average median in Canada: 3.5.

What this tells you is that the fundamentals that support high real-estate prices are simply not there in Vancouver.  People just don’t earn enough income to sustain this market at such lofty prices whereas in cities like New York and San Francisco, where real estate prices are indeed higher, median incomes are substantially higher and thus can support high prices.

Vancouver is plagued by a number of problems that keep the salaries of its citizens low:

1. Affordable commerical real estate is hard to come by in the city — leading in some cases to a perverse reverse-commute where urbanites must schlep out to the suburbs to their workplaces — but more importantly this discourages companies from locating here.
2. Most large cities with expensive downtown cores operate as financial centres — the aforementioned London, Hong Kong, and New York spring to mind.  Vancouver does not, except for our storied love affair with ponzi schemes.  Without the sustaining flow of capital through our city there is highly limited opportunity for local investment.
3. We’re still a bunch of tree-cutting, pickaxe-wielding hicks.  And BC’s resource industries, the bread and butter of Vancouver for more than 150 years, are weak thanks to everything from the US softwood lumber tarriffs to Kyoto to a number of key mining company collapses.  Our province has failed to diversify its economic base substantially away from resource businesses.
4. The advanced industries like software and aerospace that keep California sizzlin’ have failed to grow in scale in this city.  Investment in this area is weak, with very little private investment and weak government support (nearly all of the Venture Capital in Vancouver is government-derived).  We did however blow >$500 million on a handful of useless fast ferries, though.  Two notable exceptions are alternative energy and biotech.  For now, at least, they are humming along.
5. The film industry, which we in BC have courted for decades, is a fickle bride.  Since productions are built for each project and torn down when completed with little long-term planning, unfavourable economic winds mean that producers can pull up stakes and shoot in South Carolina, Mexico, or wherever they can cost-optimize.  In any case, the profits are retained in New York and LA… like a Mumbai call centre, we’re just an outsourcer.
6. Drugs, and by “drugs” I mean the cultivation and distribution of marijuana, constitutes probably the largest industry in BC and it flies completely under the regulatory / taxation radar.  Conservative estimates peg this at between $5Bn and $7Bn per year.  These people have a hard time getting mortgages.  They also tend to be undesireable tenants, since they tend to get arrested/shot at/sent into hiding — that is if they don’t blow up their penthouse with a meth lab.
7. Our transportation infrastructure is pathetic, particularly when compared with major metropolitan areas (of which Vancouver is now one) such as Boston, Montreal, Toronto, New York, London, Tokyo, and others.  If we wish to become a center of commerce then we need to be able to move people around better.  Skytrain is a laughing stock and the West Coast Express, which goes to a handful of proximate suburbs from the downtown core twice a day each way, doesn’t even merit comparison with the British Urban Railway system.  Our highways (such as they are) subject people to multi-hour commutes to travel 20km.  We have failed, failed, FAILED to build infrastructure and it will continue to haunt the city for decades to come.

For those of us in the technology industry, certainly during this housing price spike, Vancouver seems an illogical place to locate our startups or ply our trades in information technology.  While the average condo price can be as high as 2x-2.5x the price of a comparable condo in Toronto or Montreal, our salary variance is just 103.5% the national average, versus 104.2% for Toronto and 103.9% for Montreal (this according to the 2009 Robert Half Salary Guide for Technology Professionals).  While we spend more to live here in Lotus Land, we sure don’t make up for it in income.

Comparing Income to Housing Prices

So how high is too high?  Right now we are finding out.

If you were blindsided by the Vancouver Real Estate crash then you were clearly in a profound state of self-delusion.  Evidently that list of deluded fools includes our civic leaders who played russian roulette with the city’s finances, underwriting the now disastrous Olympic Village project in which the taxpayers stand to lose as much as $750 Million.  Still, even amid the free-falling values, Realtors and Developers are outright lying to you… inviting you to join in their deathmatch with catch phrases like “don’t wait too long” and “strong fundamentals“.  Where have we heard that before?  Oh right, it was John McCain, about the US Economy in September – days before it collapsed.  Oops.

UPDATE: In a passionate article, former mayor Sam Sullivan says the Olympic Village is not a clusterf*ck.

Speculators and developers will beg to differ (they’re invested in fostering positive vibes) but remember:  they’re betting with your money, not their own.  Condos down the street from ours were forced into liquidation at 40% off, and there have been stories of other developers dumping their inventory at similar price cuts.  This is the beginning of a trend, not a sign of the bottom, so if you’re foolishly lining up to jump in at this point, you get what you deserve.

Not until a software engineer making $60K-$70K per year can buy a 1-Bedroom apartment in the city will the fundamentals be aligned and the market be stabilized.  This means mortgage + maintenance of less than $1500 per month using the 30% rule.  On a 25-year mortgage that probably means this 1BR apartment has to be less than $200K.  If the research that started this article can be believed, we should expect an adjustment of as much as 60% across the board to bring Vancouver back to the Canadian mean.

So in other words, wait ’til the bottom really drops out, Vancouverites..

And then we can start figuring out why no one in this city (not even the property developers, after 2007) makes any real money.