Category Archives: Blogging

The Death Spiral At The New York Times

Extra, Extra… Read All About It !

The New York Times hikes its cover price yet again.

Another New York Times price increase.

Get ready to shell out more for your copy of The New York Times.

Extra, Extra !

Executives at The New York Times must be taking business strategy lessons from the same experts that have guided the once mighty General Motors to the brink of bankruptcy and needing to take federal bailout money to stay alive.  Shares of GM, once considered a “blue chip” stock that was among the most highly regarded of all investments, and which were trading at close to  $90 a share ten years ago, are now virtually worthless.

The New York Times has announced yet another round of price increases, the third in less than two years , that will hike the newsstand price of their Sunday edition to $5.00 or $6.00, depending on the geographic edition.  The weekday New York Times increases to $2.00 !  And you still don’t get any comics.  The price increases are effective June 1st.

$6.00 for a newspaper?  Are they joking ?  Perhaps New York Times publisher Arthur Ochs Sulzberger, Jr. hasn’t yet taken notice of the new kid on the block.   Mr. Sulzberger, we would like to introduce you to Mr. Internet.  He’s big, he’s getting bigger all the time, and he’s eating your lunch.

The Internet is eating everybody’s lunch.  This Time Magazine article names the ten most endangered newspapers in America.  And according to this CNN article, at least 120 U.S. newspapers have folded since January, 2008.

Faced with a sharp drop in advertising revenue and falling circulation, the price increases at The Times are likely to just exacerbate the problems facing the newspaper.  Price increases will inevitably produce a further errosion in circulation, which is sure to further weaken advertising income.  A decision to increase prices at a time like this, for many businesses, is tantamount to committing suicide.  We believe that the New York Times has made the worst possible decision at the worst possible time.

Our readers will note that we have not raised the cover price here at Routing By Rumor;  reading our blog is still free!

Understandably, the bean counters at The Times are desperate.  They’re being squeezed from all directions.  But you have to wonder who made the strategic decision that may very well seal their fate.  Perhaps a price decrease, coupled with an agressive advertising campaign would have been the right course to follow.  We believe that with the increasing competition for readers that the Internet has created, along with belt tightening by consumers in the depths of this economic recession, and the drastically shrinking size (the number of pages) of newspapers over the last few years, including the Times, newspapers are increasingly becoming  irrelevant to more and more readers.  It’s not unlike a phone company that keeps increasing it’s rates, in an attempt to offset the loss of revenue from customers who are dropping their traditional phone service, and using cellphones exclusively.  Price increases will only serve to accelerate the trend.

Will the New York Times disappear completely? We fully expect to see a copy of the New York Times on the newsstand in the near future, with a headline of “THE END”.  The fact that you are reading this blog, when you could be reading The New York Times instead, isn’t helping the Gray Lady one bit.  We believe that their print editions are in mortal danger,with The Times becoming an online-only newspaper.

Better buy your Amazon Kindle now !

– Routing By Rumor

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Filed under Automobile Manufacturers, Blogging, Business, Cellphones, Consumerism, Jobs, Journalism, Money, New York City, News, Routing by Rumor, Shrinking Products, Telephone Companies, The Economy, Your Money

Circuit City Finally Bites The Dust

The news shouldn’t surprise anybody, certainly not readers of this blog.

Richmond, Virginia based Circuit City stores announced today their intention to close their 567 remaining stores and liquidate their inventory.  We predicted that they wouldn’t last much past the end of the 2008 Christmas season.

That means another 34,000 American workers joining the unemployment line.

See our previous posts…

Circuit City Stores Files For Chapter 11 Bankruptcy Protection

One Foot In The Grave At Circuit City

Philip Schoonover Learns That What Goes Around Comes Around

– Routing By Rumor

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Using Website Visitor Statistics As An Early Warning System

Like the canary in the coal mine, warning of the presence of deadly gases, or the seismograph warning of an impending tsunami, website (or blog) visitor statistics provide a valuable early warning system of current events, breaking news stories, and things that will be making news in the days ahead.

Google has known this for quite a while. Google’s Zeitgeist provides statistics that show the latest search trends. You can even go back and see what searches were hot on a previous date.

Like many bloggers and Webmasters, we keep tabs on Routing By Rumor’s traffic statistics. In the past 24 hours, we’ve seen a spike in visits that are related to several of the articles we’ve written in the past. An unusually high number of visitors have landed at our doorstep after doing searches for “Walmart” (or “Wal-Mart” or “Wal Mart”), “Ashley Alexandra Dupre” and “Blackrock layoffs”. We welcome the “business”, but we’re always curious as to why people end up here.

Searches for “Walmart” have always been a top search engine source of traffic to our blog. We’re guessing that a few items related to Walmart that have been in the news in the past few days have a lot to do with the sudden spike in traffic related to Walmart. Perhaps the news coverage of Walmart’s (and other retailers) day-after-Thanksgiving “Black Friday” sales have a lot to do with the increase in search engine traffic.

Ashley Alexandra Dupre is the alleged prostitute allegedly associated with the (alleged former New York Governor) Eliot Spitzer scandal, who received some coverage in this alleged blog a few months back. But why is she suddenly a top search engine topic once again? A bit of research gave us the answer. It seems that Ms. “Dupre” will be interviewed by Diane Sawyer, in a piece that will air on ABC’s 20/20 broadcast this Friday. Who ever said that crime doesn’t pay ?

We were scratching our head on the “Blackrock layoffs” searches that were bringing visitors to our blog. We wrote a piece last winter about layoffs at WCBS-AM, which we titled “Bad Day At Black Rock”. Black Rock is the nickname for CBS’s New York City headquarters building, owing to the dark granite facade of the skyscraper. But we had not heard of any new layoffs at CBS, so why the sudden interest in layoffs at “Black Rock” ?

A bit of digging yielded the answer. There are rumors floating that a round of layoffs are about to be announced at investment company Blackrock, Inc., the largest publicly traded asset management firm in the United States. Nothing to do with CBS, but close enough that it created a spike in visitors to my blog !

So, Webmasters and SEO (Search Engine Optimization) experts take note. If you see unexpected increases in traffic to your site that you can’t explain, dig deeper to find the source. Search engines rarely lie. It may be a case of mistaken identity, as with our “Black Rock” visitors. Then again, it may be an early warning of something you should know about, possibly relating to your website, your company, or a competitor.

We wonder whether mainstream media has caught on to this as a news gathering tool. It is no secret that journalists often “find” stories because they have already been covered by another newspaper, TV or radio station. Search engine statistics should be able to scoop other sources of news. The statistics are real-time, not requiring the printing of a newspaper, or the taping and editing of a television or radio news report. We would like to think that if the Internet existed back in the days of The Daily Planet, that cub reporter Jimmy Olsen would be using his computer and Google to scoop the other reporters.

We were wondering if we would get credit for coining the term “zeitgeist journalism“, so we decided to Google the phrase. Edward Rothstein, for one, used the term in this New York Times article about trend-spotting a dozen years ago, although obviously not in reference to Google, so we probably can’t claim ownership. Maybe we’ll just call it “Google journalism“.

Great Caesar’s ghost !

– Routing By Rumor

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Filed under Blogging, Business, CBS Radio, Entertainment, Google, Journalism, Life, Movies, New York City, News, Retail, Retailers, Routing by Rumor, Science Fiction, Stock Markets, TV Shows, Uncategorized, Walmart, WCBS-AM

Circuit City Stores Files For Chapter 11 Bankruptcy Protection

This morning, Circuit City filed a bankruptcy petition (see bloomberg.com article), In Re Circuit City Stores Inc., 08-35653, with the U.S. Bankruptcy Court for the Eastern District of Virginia. If you’ve been following this blog, you won’t be surprised by today’s filing. Circuit City has had one foot in the grave for a while now (see our article from last week). See additional coverage of this story by Forbes, The Associated Press, The New York Times, Barron’s and Reuters.

The Richmond Times-Dispatch reported that last Friday, up to 800 employees at Circuit City’s corporate headquarters (more than a third of the workers there) received pink slips.

Circuit City owes well over half a billion dollars to suppliers including Hewlett-Packard, Samsung, Sony, Zenith, Toshiba, Garmin and Nikon. With bankruptcy looming, more and more vendors have refused to extend credit to Circuit City. With today’s filing, we’re pretty sure their ability to obtain terms from vendors is now pretty much non-existent. It probably also ensures that the New York Stock Exchange will de-list Circuit City, as they have already warned, if their share price doesn’t make a sustained recovery to above $1.00 a share. In early trading today, Circuit City shares have lost more than 90% of their value, falling from a lofty $0.12 per share when the market opened, and now sitting at an embarrassing two pennies a share (but that’s at least twice as much as we think its worth, so you could say its overvalued).

11/11/2008 Update…

Well, that didn’t take long. The latest milestone on the devolution of Circuit City has occured. Circuit City shares have been delisted from the New York Stock Exchange (NYSE), and are now trading on the Pink Sheets.  With all these pink slips and pink sheets, maybe pink is Circuit City’s new color.  Circuit City is now what is referred to as a “penny stock”. That light you see at the end of the tunnel just may be the oncoming Best Buy Express. Click here to get a quote on Circuit City shares (CCTYQ.PK)

Things have gone steadily downhill for Circuit City since they made the absolutely brilliant business decision in March of last year, to fire 3,400 of their most experienced employees. Consumerist.com has posted
this excellent timeline of Circuit City’s decline, titled “How Circuit City Came Undone”, which shows their declining stock price in relation to various events in their demise. The graph looks a lot like a ski slope. It’s the sort of thing they’ll probably use in business schools, when teaching a course in how to destroy a successful company.

Perhaps the saddest part of this modern day Greek tragedy is the fact that the executives who were the architects of this debacle earned millions of dollars for their role in the company’s failure. Perhaps the new scrutiny that the country’s economic meltdown is focusing on executive compensation will cause the directors of corporations to hold their executives responsible for the bad decisions they make. Here’s a suggestion… Instead of simply lavishing millions of dollars in company stock on executives, how about adding the condition that they won’t be vested unless there is a certain number of quarters of future growth. For instance, Mr. CEO, that five or ten million dollars worth of company stock won’t be yours unless the company makes money over the next two years. No more “take the money and run”. For too many corporate executives, it has been a game of “heads I win, tails I win”.

Given Circuit City’s history and reputation, the decrepit state of the U.S. economy, and the competition that exists in the consumer electronics space (especially from competitors Best Buy and Walmart), we think it’s a safe bet that Circuit City will never emerge from bankruptcy, and that’s, as Martha Stewart would say, “a good thing”. Last week, they announced the closing of many of their stores, and we wouldn’t bee surprised if more closings follow before the end of the year.

Coming at the beginning of the holiday shopping season, the closings and the bankruptcy filing might attract some bargain hunters, but let’s be honest… Who wants to make a major purchase from a retailer who may very well not be around, should you need to return an unwanted or defective purchase. It pretty much goes without saying that anything purchased at a going-out-of-business sale is sold as-is, no returns, no refunds. Caveat emptor.

We’re going to go out on a limb here, and make the following prediction; Circuit City’s Chapter 11 bankruptcy will become a Chapter 7 filing (liquidation) within six months, perhaps much sooner. Check back here to see how our prediction fares.

– Routing By Rumor

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We’ve Been Stumbled Upon By Stumbleupon.com

Like many bloggers, we like to look at the visitor statistics for our blog. In our case, that’s a combination of the stats which WordPress.com provides, and the wonderful free statistics we get from Statcounter.com.

Since we started RoutingByRumor late last year, we’ve become accustomed to the ebb and flow of traffic to our blog. Weekly traffic patterns are very predictable. Generally speaking, Saturday is the slowest day of the week, followed by Sunday, which is generally only marginally busier. Midweek tends to see the most traffic, and we’ve seen a pronounced drop in traffic during the summer months, particularly in August. It’s so predictable, that we can usually forecast to within a percent or two, what the traffic on any particular day will be. It sort of reminds us of how precisely electric utilities can predict electricity demand, based on day of the week, time of year, outside temperature, wind speed, cloud cover, etc.

We’ve read much into these patterns. We believe that most web surfing, or at least most blog reading, is probably done while at work. Sometimes you can prove this based on the DNS information associated with visitors IP addresses, such as RealBigCorporation.com (a hypothetical example). We see very predictable traffic patterns to each posting on our blog. Certain articles are perennial favorites, while other posts hardly ever muster any readers (a terrible shame, since we can attest to the fact that every single one of our posts are of excellent quality and worthy of your consideration). We never know ahead of time which of our articles will attract lots of traffic, and which ones will live their life in solitary confinement. Perhaps THIS article about Stumbleupon will be a big hit. Then again, maybe not. It’s difficult to predict. Sometimes, events in the news cause a particular article on our blog to explode in popularity for a few days.

If we’ve learned one thing, it’s that the popularity can be very fleeting. Another is that anything you post related to a scandal, public figures in the news, or some dirt being dished about someone, seems to attract many more visitors than any article you can post with any redeeming value. Sadly, the latest piece of trash about Brittany Spears will attract much more traffic than an announcement that you’ve found a cure for cancer, a solution to global warming and the key to world peace. It doesn’t say much about how discerning the average web surfer is, and it’s also probably why supermarket tabloids sell so well. Up until this past weekend, when Stumbleupon opened the floodgates of hell, the most traffic we ever saw at RoutingByRumor was in the days following our posting of this article. What a sad commentary on the human race.

While visitor statistics usually don’t tell us which search engine a visitor used to find us, it’s probably a good bet that it’s usually Google, the 10,000 pound gorilla of search engines. Thanks, Sergey! WordPress alerts Google and other search engines when new content os posted to a blog. It’s kind of scary how fast Google usually indexes our latest posting. Things usually appear to a limited extent in Google results immediately, with a fuller indexing within 24 to 48 hours.

Unless something pops up in the news that is in some way related to one of our articles, there aren’t many surprises. We see some unexplained transient spikes in traffic to certain articles, but that’s generally all. So, we had to do a double take this past weekend, when traffic to a single article on our blog shot up around 10,000 % or about 100 times more than what we normally see. Our first impression was that it was some sort of problem with the stats. It wasn’t. Good thing that WordPress doesn’t charge us for bandwidth usage !!!

What happened ? We had been “stumbled upon” by stumbleupon.com, which we had never heard of. More specifically, a stumbleupon.com member named Bizspotter stumbled this post of ours.

Apparently, Stumbleupon is part search engine, part social networking site, and part viral marketing tool. Wikipedia describes Stumbleupon this way… “StumbleUpon chooses which Web page to display based on the user’s ratings of previous pages, ratings by his/her friends, and by the ratings of users with similar interests“. Sounds like an interesting concept. Similar to how a site like Amazon suggests to you that people who bought this item also bought these other items, or iTunes telling you that people who bought this album also liked these other albums.

The fact of the matter is that it looks to us like Stumbleupon is the crack cocaine of traffic generators. Why do we say this ? Because despite the incredible amount of traffic it sent to our blog in a matter of hours (it was pretty much all over by the next day), it appears that none of those visitors were the least bit interested in reading the article they landed on, or anything else we’ve blogged about. We saw absolutely no increase in click-thrus. That is, once they landed at our site, unlike many visitors who find us via a search engine, these Stumbleupon visitors didn’t stick around, and they didn’t click on any links in the article. Unlike many of the “normal” visitors to RoutingByRumor, they also didn’t read any of our other articles.

So, it appears to us that Stumbleupon serves up relevant traffic much the way that McDonald’s or Burger King serve up health food. A search engine like Google is very good at finding content on the Web that is of interest to someone doing a search. It appears that Stumbleupon does a very poor job of finding content that will interest a particular web surfer. Of course, the Stumbleupon paradigm is new to us. Perhaps there are others with more experience with products like Stumbleupon, who have a different opinion as to it’s value. Based on what we’ve seen, if we were paying for traffic to be referred to our blog, we wouldn’t pay a cent for the “junk” traffic Stumbleupon is sending our way. The sheer number of hits that stumbling a URL can generate are very impressive, but a closer look at the quality of that traffic is utterly disappointing indeed.

It makes you wonder why eBay thought that Stumbleupon was worth the $75 million they paid for it. Probably because anything on the Web these days with a social networking slant (facebook, myspace, youtube, linkedin, etc., etc., ad nauseum) is hot.  But then, eBay thought Skype was worth shelling out at least $2.6 billion for (mere pocket change). Hey, people once ridiculed William Henry Seward for spending two cents per acre for a piece of land called Alaska ! We guess that when you have as much money as eBay, dropping a billion here and a billion there isn’t a big deal.  Besides, have you noticed that most big business deals aren’t measured in terms of millions of dollars anymore, but rather in the billions of dollars.  I don’t think it’s inflation so much as it is proof that wealth is being concentrated more and more in a smaller and smaller percentage of society, certainly in the United States, and no doubt elsewhere.  It’s also a result of the shift in our economy, away from dominance by companies like IBM, AT&T and General Motors, to the new billionaires… The Microsofts, Googles, eBays and WordPresses of the world.  (Oops… how did WordPress slip in there ?)  If it doesn’t end in “.com”, it doesn’t really matter anymore.  But I digress.

Of course, we’re probably just a wee bit out of touch with the masses when it comes to appreciating some of the finer websites the Web has to offer. For instance, we can’t quite understand why anyone with even the slightest semblance of a life would find myspace.com the least bit interesting, but at least a few myspace users would probably disagree with us. Myspace claims to have blown by the 100 million user mark more than two years ago, and we’ve seen reports that more than 250,000 new myspace accounts are created daily. Gee whiz… it’s almost as popular as RoutingByRumor !

On the one hand, we were underwhelmed by Stumbleupon. On the other hand, we know when we’re outnumbered (IYCBEJE**). So, if you liked this article, Stumble It!

– Routing By Rumor

(** IYCBEJE – If You Can’t Beat ‘Em, Join ‘Em)

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Driving South At General Motors

We just came across a post at the blog “The Truth About Cars” (TTAC) that is spreading a rumor (could you imagine that… RUMOR mongering !) that Rick Wagoner, the CEO at General Motors, will be taking a much needed vacation within the next couple of days. A permanent vacation.

According to this profile at forbes.com, Mr. Wagoner’s compensation for FY 2007 was just shy of $5 million. And that’s despite shareholder value that is melting away faster than an ice cube on a hot August day. Not a bad gig if you can get it, in our opinion.

We have no idea whether the story posted at TTAC has any basis in fact. It will be interesting to see if Rick Wagoner gets to take his “vacation”… whether he resigns, is dismissed, or takes a different position within GM (he’s been there for the past 30 years). If the rumor is true, it shouldn’t surprise anyone, especially the motorheads here at Routing By Rumor. In the past, we have written about why we are one GM customer that will never buy another vehicle from this company. And since we are a die-hard proponent of that quaint notion of “Buy American”, and we were a loyal GM customer for nearly our entire driving career, you know that something is very wrong with this company. We feel that if they couldn’t hold on to us as a customer, they have little chance of holding on to anyone else.

Those poor GM shareholders. Back in January, 1999, GM’s share price was sitting pretty at $90. When we checked it this morning, it was below $10 (view the current GM share price). That equals a loss of shareholder value of almost 89% from it’s all-time high. GM shares are also more than 76% off their 52-week high of $43.20. If you’re invested heavily in GM, chances are you can’t afford to buy one of the gas guzzling GM SUVs piling up in dealer’s lots, no matter how worthless they become. Thanks to $4.00 a gallon gasoline and an economy that is on life support, the only thing dropping faster than GM’s share price is it’s SUV and pickup sales.

This is probably just a cruel coincidence, but the TTAC blog runs ads on their site, and the ads that appeared on the article we cited above happened to be for a vehicle from KIA. How fitting.

So Rick, if it turns out you’re looking for work, and you have any writing experience, send us your resume. Blogging experience, a familiarity with WordPress, and some Internet savvy will all be helpful. Please include a cover letter with your salary requirements.

– Routing By Rumor

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Filed under Automobile Manufacturers, Blogging, Business, Cars, Consumerism, Employment, Energy costs, Environment, Jobs, Journalism, Money, News, Routing by Rumor, Stock Markets, The Economy, Uncategorized, Wordpress, Your Money

Amazon Web Services… Not Quite “Five Nines” Uptime !

…Not five nines,

…or four nines,

…not even three nines (99.9% uptime) !

If you tried to visit some of the Web’s most popular sites for a good part of the day yesterday, July 20, 2008, you were likely disappointed. Sites like WordPress (where this blog is hosted), Twitter, SmugMug and others, were impacted for hours yesterday because they depend on Amazon’s S3 (Simple Storage Service), which went down. Apparently, even some Apple iPhone applications were impacted by the S3 outage. It was the second time in less than six months (the previous outage occured on February 15) that AWS (Amazon Web Services) has experienced a major failure.

Based on what we’ve learned so far about S3, our best guess is that yesterday’s outage was caused by a software bug, a human error of some sort, or as was the case in their February outage, some set of conditions that occured within their system that overwhelmed their ability to handle traffic (interestingly, the latest problem occured early on a Sunday morning… not exactly a time when you would expect a peak load on their system). We view a malicious attack on the service a less likely cause, and hardware or connectivity problems a very unlikely cause. S3 is a decentralized system designed to survive the loss of some of it’s components and still operate normally. In many widespread telecom or network failures suffered by providers and carriers in the past few years, the cause has often been determined to be software related or human error (like a construction crew cutting a fiber optic cable they didn’t know was buried there).

As an aside, here’s some articles about human error that has caused some major outages…

Optus cable culprit found

The Backhoe, The Internet’s Natural Enemy

Cut in Fiber Cable Disrupts Internet Traffic Nationwide

The Backhoe: A Real Cyberthreat

The S3 outages bring to mind another concern among people responsible for the operation of the Internet itself. One of the services that the Internet is built on is DNS (the Domain Name System). The DNS system is what allows your computer to find a website such as this one, from among the millions of computers and websites on the Internet. There is concern among some that even though DNS functionality is spread across many servers on the Internet, in a hierarchical system, that a widespread DNS failure could occur. This would cripple almost all Internet traffic. Worst of all, if there was a major DNS failure, you might not be able to get to this blog ! Heaven forbid.

S3 is a “cloud” storage service. Internet-based computing resources are collectively referred to as cloud computing (see this Businessweek article on cloud computing). In cloud computing, resources that were traditionally located, say, in a company’s data center (disk storage, application software, servers, etc.) are offered by service providers via the Internet. Cloud computing is a relatively new paradigm, and problems similar to what Amazon has experienced are sure to make CIOs and IT managers hesitant to rely on the cloud when they can provide computing resources locally and have greater control over them.

Almost by definition, services offered in the cloud must offer high availability. The uptime standard that is generally used in the telecommunications and computing industries for critical systems is “five nines“, or 99.999% availability. That translates (approximately) to less than five minutes downtime a year, and generally does not include scheduled service outages. In the United States, the public telephone network operated by the Bell System was consistently able to achieve five nines reliability (so Ma Bell wasn’t that bad to us after all, may she rest in peace). Clearly, Amazon’s S3 service has failed this benchmark. It doesn’t even appear that AWS has achieved two nines availability (less than about seven hours downtime per month) this month. That’s utterly dismal performance that is unacceptable for critical systems, and it does not bode well for Amazon’s future in the cloud, or for cloud computing in general.

Interestingly, Amazon’s S3 SLA (Service Level Agreement) states that users are not entitled to a service credit unless their uptime drops below three nines (99.9%) in any month, and even if they fail to achieve two nines (99% uptime) in a month, they will only give users a 25% credit. They must not have a lot of confidence in their ability to provide four nines availability (less than one hour a year of downtime), which Amazon states is one of the design requirements that S3 was built to provide. And if they don’t meet their service levels, will they give their customers a refund? No. It appears all they will offer is a credit to be applied to future service. Not good.

But don’t expect disgruntled S3 customers who have been impacted by Amazon’s Simple Storage System outages to issue press releases critical of Amazon. Paragraph 4.2.4 of their customer agreement specifically prohibits that unless you get their permission first. Incredible.

With an SLA like Amazon’s, and especially because of their outages in the past few months, we might be inclined to use a service such as S3 only to store backup files. We don’t feel that the service is reliable enough to be used to support a live website or other mission critical systems. And even if Amazon had a 100% uptime record, there’s always this to worry about when deciding if you want to depend on services in the cloud (and to think that you were worried about the Y2K problem!).

Perhaps cloud computing is an idea whose time has not yet come.

– Routing By Rumor

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