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That would be true if Windows 8 wasn't doing the same thing.  Both companies will eventually make the PC itself redundant, and all the various devices will be just appliances for us to access the net and our data.  I don't think Apple is doing anything different than what Microsoft or Google are doing.  They are just trying to maintain their moats as they also make this transition.  Cheers!

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That would be true if Windows 8 wasn't doing the same thing.  Both companies will eventually make the PC itself redundant, and all the various devices will be just appliances for us to access the net and our data.  I don't think Apple is doing anything different than what Microsoft or Google are doing.  They are just trying to maintain their moats as they also make this transition.  Cheers!

 

The need for local resources/local software/local computing power won't disappear. Data won't be fully software independent. In reality we will have a combination of local, hybrid and purely remote applications and types of use and we will have different types of topologies exactly like today. The cloud extends current paradigms more than redefines them. So yes all these companies are trying to preserve their moats in the new mix and there is room for most of them. What is interesting with Microsoft is the convergence opportunities coming from legacy + all areas where it is present even if late to the party at times. The deal with Comcast + XBox + Skype is a young example of that.

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Apple's iCloud is a dagger, actually more like a howitzer, pointed at MSFT

 

IMHO, Apple hasn't shown their ability with software yet - given their scale. They produce great customer experience and they have been known for it from day-1. The earlier version of this iCloud was known as mobileme and it was a failure. Remains to be seen how this goes.

 

Their software focus has been on personal software rather than business, and much of it is included in OSX (rather than sold on it's own - although they sell upgrades). iTunes, iPhoto, iMovie, GarageBand, Logic, the iWork suite, iWeb, etc are all very well designed software, many of which are quite better than any Microsoft counterparts.

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A few observations:

 

1) If Apple is going to kill windows it's going to need to conquer the lower priced end of the market. Many people just aren't willing to buy a $1,000 - $2,000 laptop.

 

2) Someone on this board suggested buying dropbox. I think that actually is a great idea, and could see its functionality being integrated directly into Windows 8.

 

3) That article presupposes that congress would *let* Apple/Google maintain a stronghold on one's data and give them permanently sticky customer bases. I could easily see congress legislating some sort of "open access" policy.

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This article is so dramatic that it should have opened with "It was a dark and stormy night."

 

The way that so many bloggers have latched on to this idea of demoting the PC is a bit ridiculous.  The PC has been a device since the day the internet was invented.  Apple's original concept was to use the PC as a hub and now they are providing a solution that uses iCloud as a hub instead (unless you want to store more than 5GB of photos, then you're in limbo I guess).  I have plugged my BlackBerry into my PC exactly zero times, so by that measure, RIM demoted the PC first.  This isn't a new concept and it baffles me that industry pundits are so easily swayed when it comes from the mouth of Jobs.

 

The biggest impediment to killing the PC is businesses.  I'm trying to find more current data, but historically 75% of PC sales have gone to businesses.  Very few of these businesses can economically move off of the Windows platform, so I'm guessing that something like 50-60% of the legacy PC business will benefit more by sticking with Windows vs. switching.  Microsoft should leverage that platform as much as possible to introduce synergistic benefits in competing technology lines.  Microsoft has the greatest potential of any technology company when it comes to competing in the cloud, in mobile, and in tablet computing.  The question is whether they will meet their potential or squander it.

 

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I think people are a bit off. A PC / laptop should hit $150 sooner or later. Why remove a 250 gig hard drive when it costs nothing? Its just not making any sense. I think everything will coexist. I can see companies using cloud for software management, but people (or at least I, will always want mass local storage) and access to files while offline.

 

I see this working like dropbox, and not much else. All of this dumb terminal stuff is overblown.

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That would be true if Windows 8 wasn't doing the same thing.  Both companies will eventually make the PC itself redundant, and all the various devices will be just appliances for us to access the net and our data.  I don't think Apple is doing anything different than what Microsoft or Google are doing.  They are just trying to maintain their moats as they also make this transition.  Cheers!

 

The need for local resources/local software/local computing power won't disappear. Data won't be fully software independent. In reality we will have a combination of local, hybrid and purely remote applications and types of use and we will have different types of topologies exactly like today. The cloud extends current paradigms more than redefines them. So yes all these companies are trying to preserve their moats in the new mix and there is room for most of them. What is interesting with Microsoft is the convergence opportunities coming from legacy + all areas where it is present even if late to the party at times. The deal with Comcast + XBox + Skype is a young example of that.

 

goldfinger,

 

You are certainly aware of the converging of voice, video, and data to internet protocol. The cloud will be the computer, APPS will be the software for the dumb devise, and content will be delivered over one network connecting us all.

 

Skype/voice + Microsoft/video + Level 3/data delivery = one network connecting us all

 

 

Ben Graham,

 

Thanks for you input. I am aware of all this because I design software technologies myself, cloud related or not.

It just is a bit more complex than that!

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I think people are a bit off. A PC / laptop should hit $150 sooner or later. Why remove a 250 gig hard drive when it costs nothing? Its just not making any sense. I think everything will coexist. I can see companies using cloud for software management, but people (or at least I, will always want mass local storage) and access to files while offline.

 

I see this working like dropbox, and not much else. All of this dumb terminal stuff is overblown.

 

Exactly! Moreover local computing power will still be needed for many applications...

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Here is an interesting article whose thesis is that Apple's iCloud is a dagger, actually more like a howitzer, pointed at MSFT.

 

 

http://www.cringely.com/2011/06/iclouds-real-purpose-is-to-kill-windows/

 

Here is an interesting link showing that iCloud actually uses MSFT's cloud service :)

 

http://www.redmondpie.com/guess-what-icloud-uses-windows-azure-services-for-hosting-data/

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There are 3 companies that reportedly have over a million servers in data centers.  Amazon, Google, and you guessed it.. Microsoft.  If anything I would say Apple is the company that's bringing up the rear when it comes to cloud computing...

 

They are bringing up the rear, but they actually have the most intuitive appliances to take advantage of the cloud.  If Microsoft or Google could achieve the same user experience with Windows or Android, then that would be very different.  They are getting much better, but still have a ways to go.  Cheers!

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Here is an interesting article whose thesis is that Apple's iCloud is a dagger, actually more like a howitzer, pointed at MSFT.

 

 

http://www.cringely.com/2011/06/iclouds-real-purpose-is-to-kill-windows/

 

Here is an interesting link showing that iCloud actually uses MSFT's cloud service :)

 

http://www.redmondpie.com/guess-what-icloud-uses-windows-azure-services-for-hosting-data/

 

Thanks that was a good article. Apple is dead focused on user experience.

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There are 3 companies that reportedly have over a million servers in data centers.  Amazon, Google, and you guessed it.. Microsoft.  If anything I would say Apple is the company that's bringing up the rear when it comes to cloud computing...

 

They are bringing up the rear, but they actually have the most intuitive appliances to take advantage of the cloud.  If Microsoft or Google could achieve the same user experience with Windows or Android, then that would be very different.  They are getting much better, but still have a ways to go.  Cheers!

 

Kinect technology will be used to get there: http://seattletimes.nwsource.com/html/businesstechnology/2015343377_microsoftkinect17.html.

I also saw some demos of Microsoft research in terms of user interface for the future and it is really cool.

Microsoft's pipeline is really very rich right now and it covers all areas where Microsoft has to meet competition. I cannot wait to not only see it deployed but also to find out all cross-applications that they will create and push from all this (like the Comcast + Skype deal).

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Kinect technology will be used to get there: http://seattletimes.nwsource.com/html/businesstechnology/2015343377_microsoftkinect17.html.

I also saw some demos of Microsoft research in terms of user interface for the future and it is really cool.

Microsoft's pipeline is really very rich right now and it covers all areas where Microsoft has to meet competition. I cannot wait to not only see it deployed but also to find out all cross-applications that they will create and push from all this (like the Comcast + Skype deal).

 

I agree.  They are finally on the right track, and realize they have to work quickly.  Windows adapted and it is much more user-friendly, but they had to go through the mistake of Vista to get to Windows 7.  Same thing with gaming.  They've had to make similiar mistakes in mobile and tablets, and they will get better.  But their competitors are moving very quickly, so they will have to do the same. 

 

RIMM may end up being the next odd man out...just too slow getting their technology out, and are falling behind.  RIMM's still making money, but the moat is diminishing quickly.  Microsoft does not want to go that route.  Cheers!

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Kinect technology will be used to get there: http://seattletimes.nwsource.com/html/businesstechnology/2015343377_microsoftkinect17.html.

I also saw some demos of Microsoft research in terms of user interface for the future and it is really cool.

Microsoft's pipeline is really very rich right now and it covers all areas where Microsoft has to meet competition. I cannot wait to not only see it deployed but also to find out all cross-applications that they will create and push from all this (like the Comcast + Skype deal).

 

I agree.  They are finally on the right track, and realize they have to work quickly.  Windows adapted and it is much more user-friendly, but they had to go through the mistake of Vista to get to Windows 7.  Same thing with gaming.  They've had to make similiar mistakes in mobile and tablets, and they will get better.  But their competitors are moving very quickly, so they will have to do the same. 

 

RIMM may end up being the next odd man out...just too slow getting their technology out, and are falling behind.  RIMM's still making money, but the moat is diminishing quickly.  Microsoft does not want to go that route.  Cheers!

 

I agree also. And you know Microsoft has an history of coming next but invading the market with an approach that works business-wise once the market has pretty much been created by others or so. I mean look at Xbox, Windows and Office (Excel and Word and even Sharepoint! for example).

Microsoft might end up being the one that really puts RIMM in a very tough position as they will compete in the enterprise business and Microsoft will do what it has done before to build a moat: have all the important features, applications and bundles that make them more enticing if not a must-have in many situations.

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There are 3 companies that reportedly have over a million servers in data centers.  Amazon, Google, and you guessed it.. Microsoft.  If anything I would say Apple is the company that's bringing up the rear when it comes to cloud computing...

 

You are assuming that owning data centers is necessary to be a successful "cloud" provider.

 

Keep in mind that there are different aspects of the cloud computing experience that these guys (AAPL, MSFT, GOOG, AMZN, etc.) are involved in.  There is the cloud application development platform side (e.g., Google App Engine, Windows Azure), the UI/client side (e.g., Android/Chrome, Win 7/WP7, OSX/iOS), the application/service side (e.g., YouTube, iTunes, Google.com, Bing), and probably other aspects I'm forgetting to note.

 

The data centers that MSFT, GOOG, and AMZN are building are all being built for various reasons.  Amazon builds data centers in order to provide IaaS services and their own apps/services (vertical integration).  GOOG builds data centers to provide a PaaS product and to run its own apps/services like Search and YouTube (vertical integration).  MSFT builds data centers to provide a PaaS product (Windows Azure) and possibly to run its own apps/services like Office365 and Bing.

 

AAPL appears to be out of the game because they don't own as many data centers.  However, it is not necessarily the case that these cloud-focused companies must own their data centers, with the exception of IaaS providers (who by definition must own the computing infrastructure).

 

Vertical integrations has been great so far with because PaaS providers and app/service developers have been able to innovate and experiment with their platforms, apps, and services on their own data centers in secure ways, ensure QoS, and innovate with respect to the data centers themselves, driving efficiencies that benefit the platform, app, and service providers themselves. 

 

But there is a growing movement to make data centers more efficient by open sourcing innovations such that the software providers can outsource their infrastructure without giving up a competitive advantage (e.g., the benefits of vertical integration for a PaaS product).  Indeed, Facebook's OpenCompute project is aimed precisely at removing any competitive advantages of vertical integration -- Facebook wants data centers built by various potential outsourcing partners that are just as good as the in-house data centers built by GOOG and MSFT. 

 

Do we really know that it will be necessary for GOOG, MSFT, and AAPL to have their own data centers in order to provide their cloud platforms and apps/services in a couple of years?

 

It is notable that MSFT is going to offer Windows Azure as an appliance that can be run in non-MSFT datacenters (e.g., HP and MSFT data centers).  There is no reason to believe that Apple will not do the same thing with its own cloud OS, which I believe they are working on.  MSFT fanboys should resist dismissing Apple at every turn, claiming that they are not innovative or that they will be relegated to irrelevance in the "cloud."  Owners of MSFT are doing themselves a disservice to underestimate the competition.

 

By the way, it wouldn't be a bad bet to go with companies that could potentially sell these big cloud computing providers the equipment and space needed to run their platforms, apps, and services, provided that these companies are being priced cheaply by the market.  Communications services providers as well, especially backbone providers like T, VZ, and the company who must not be named. ;D

 

To conclude, I will see your MSFT and raise you some DELL! ;D

 

Note: I am mildly long MSFT, long GOOG, and verrry long DELL.  No position in AAPL.

 

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Tx, I would like to hear more from you on Dell, as well as anyone else that is long on Dell.  I'll start another thread and we can post on there.  I have no stake in Dell, but am intrigued by what everyone is seeing, including Fairfax.  I see the value (especially in light of all that cash), but I have difficulty seeing the moat.  Cheers!

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Guest VAL9000

It is notable that MSFT is going to offer Windows Azure as an appliance that can be run in non-MSFT datacenters (e.g., HP and MSFT data centers).  There is no reason to believe that Apple will not do the same thing with its own cloud OS, which I believe they are working on.  MSFT fanboys should resist dismissing Apple at every turn, claiming that they are not innovative or that they will be relegated to irrelevance in the "cloud."  Owners of MSFT are doing themselves a disservice to underestimate the competition.

It looks like the Azure appliance is more geared towards servicing all companies who are interested in building their own "private clouds".  Maybe that's just the 2.0 term for your typical enterprise customer data center.  If Apple wants to make a serious push into the enterprise, they will have to offer something like this to their customers.  Larger corporations are not always going to accept their important data living in a cloud OS out in the ether.  But what that eventually looks like will depend entirely on Apple's cloud OS offering.

 

Amazon could be an equally likely candidate for entering into this private cloud market.  Offering services like data center design and licensing their infrastructure management software would be a great place for them to make some high margin revenues.  OpenCompute might work against this idea, but a market with a diverse set of options is a healthy market.

 

I'm a little surprised at the enthusiasm around Microsoft's cloud offerings.  They've made some good headway for sure, but Microsoft isn't exactly synonymous with high performance internet applications.  That position is held by the Linux-Apache-MySQL-PHP (LAMP) stack.  I was talking with a friend of mine yesterday about this.  Microsoft's .Net has been wildly successful with respect to business applications, but has sucked in a web-based setting.  Not sure if this is cost, scale, ability, performance, perception, or what.  But, it's interesting that Microsoft is making the push that they're making into the cloud given this history.  It could be that they see a lot more business applications migrating out to the cloud and they want to be the default software provider for those applications.  I don't really know.

 

Also, Tx, we're probably seeing overly enthusiastic posts with respect to Microsoft because many of us don't believe Microsoft's market cap correctly reflects its intrinsic value.  If we saw AAPL trading at 9.5 trailing P/E then you can bet that all of the reasons for why this is an insane valuation for that company would be coming out.  Right now, AAPL is probably undervalued given their runway and momentum.  At 12x PE I'd probably start saying something.  At 15-16x PE, it's hard for me to risk the time and the money to make a determination either way.  My view, anyway.

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I'm a little surprised at the enthusiasm around Microsoft's cloud offerings.  They've made some good headway for sure, but Microsoft isn't exactly synonymous with high performance internet applications.  That position is held by the Linux-Apache-MySQL-PHP (LAMP) stack.  I was talking with a friend of mine yesterday about this.  Microsoft's .Net has been wildly successful with respect to business applications, but has sucked in a web-based setting.  Not sure if this is cost, scale, ability, performance, perception, or what.  But, it's interesting that Microsoft is making the push that they're making into the cloud given this history.  It could be that they see a lot more business applications migrating out to the cloud and they want to be the default software provider for those applications.  I don't really know.

 

Also, Tx, we're probably seeing overly enthusiastic posts with respect to Microsoft because many of us don't believe Microsoft's market cap correctly reflects its intrinsic value.  If we saw AAPL trading at 9.5 trailing P/E then you can bet that all of the reasons for why this is an insane valuation for that company would be coming out.  Right now, AAPL is probably undervalued given their runway and momentum.  At 12x PE I'd probably start saying something.  At 15-16x PE, it's hard for me to risk the time and the money to make a determination either way.  My view, anyway.

 

Well I'm not sure if I would characterize my post as one of the over enthusiastic ones, but I do agree with this last point.  it's more a reaction to MSFT's valuation vs its competitive position.  The implication I made was just that MSFT isn't sitting down just letting everyone else own this market.  They are actively engaged and very cognizant of what's going on, to the order of being one of the 3 biggest server owners.  Now how successful they will be is a question.  But they have a legion of developers they would like to keep and migrate.

 

Sanj I don't understand your comment about Apple having the "most intuitive appliances to take advantage of the cloud".  I guess you're referring to their consumer devices?  I agree that they are intuitive.  Or are you referring to some cloud appliance like Google's search appliances?  MSFT at least is making a bigger play on the backend and the application development stack, that's less unrelated to the devices.  As I've said a few times (I think on this board), MSFT is really more of an enterprise company now. 

 

Val, when you're talking about the "Linux-Apache-MySQL-PHP (LAMP) stack" is that very scalable?  Does it just sit on top of a scalable application server? 

 

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Guest VAL9000

Val, when you're talking about the "Linux-Apache-MySQL-PHP (LAMP) stack" is that very scalable?  Does it just sit on top of a scalable application server? 

I'm wandering off into the periphery of my understanding of web services architecture in answering this, but I'll do my best.

 

My understanding is that LAMP gives some of the right tools for proper scalability, but scalability is not a preordained result.  With any application, you need to identify the choke points of scale when you design your system, otherwise it will fail regardless of how good the supporting infrastructure is.

 

I think where LAMP is most appropriate for providing scale is with cost.  When you move from 1 server to 10, software licensing costs aren't really an issue.  But when you move from 1,000 to 10,000, it can really screw up your business.  Facebook and Google would be much less profitable if they were not built with "free" software.  I put free in quotes because there's a maintenance burden for all software deployments, but for highly scalable deployments, the cost of this burden can be closer to fixed than to variable.

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It looks like the Azure appliance is more geared towards servicing all companies who are interested in building their own "private clouds".  Maybe that's just the 2.0 term for your typical enterprise customer data center.  If Apple wants to make a serious push into the enterprise, they will have to offer something like this to their customers.  Larger corporations are not always going to accept their important data living in a cloud OS out in the ether.  But what that eventually looks like will depend entirely on Apple's cloud OS offering.

 

Absolutely.  The point remains, though, that it is quite possible to create a PaaS solution that runs on data centers not owned by the PaaS solution developer as long as the data centers have hardware that it is optimized for the platform.

 

One thing to note, too, is that just because an Apple PaaS platform is not successful with enterprise does not mean that its client-side OS's will be unsuccessful with enterprise.

 

I'm a little surprised at the enthusiasm around Microsoft's cloud offerings.  They've made some good headway for sure, but Microsoft isn't exactly synonymous with high performance internet applications.  That position is held by the Linux-Apache-MySQL-PHP (LAMP) stack.  I was talking with a friend of mine yesterday about this.  Microsoft's .Net has been wildly successful with respect to business applications, but has sucked in a web-based setting.  Not sure if this is cost, scale, ability, performance, perception, or what.  But, it's interesting that Microsoft is making the push that they're making into the cloud given this history.  It could be that they see a lot more business applications migrating out to the cloud and they want to be the default software provider for those applications.  I don't really know.

 

My understanding -- and I could be wrong about this because it's been a long time since I've really done any real coding -- is that Windows Azure is far more turnkey, designed to take out whatever hard lifting there is of developing and maintaining on a LAMP stack.  That's why it's a PaaS solution.

 

Also, I'm pretty sure Windows Azure supports development using a number of languages that are popular with web developers (e.g., Ruby). 

 

Also, Tx, we're probably seeing overly enthusiastic posts with respect to Microsoft because many of us don't believe Microsoft's market cap correctly reflects its intrinsic value.  If we saw AAPL trading at 9.5 trailing P/E then you can bet that all of the reasons for why this is an insane valuation for that company would be coming out.  Right now, AAPL is probably undervalued given their runway and momentum.  At 12x PE I'd probably start saying something.  At 15-16x PE, it's hard for me to risk the time and the money to make a determination either way.  My view, anyway.

 

I have no problem with enthusiastic posts about MSFT. 

 

I'm just suggesting we try to be rational about our investee companies.  When one is invested in MSFT, it's easy to fool oneself into believing that AAPL is behind in the cloud or that WinPhone is just as user friendly as iOS and Android.  If you own GOOG, it's easy to fool yourself into thinking that Bing will never make inroads and that it poses no threat to Google's search engine.

 

Better to have an objective view of the risks and rewards of MSFT, right?

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Guest VAL9000

One thing to note, too, is that just because an Apple PaaS platform is not successful with enterprise does not mean that its client-side OS's will be unsuccessful with enterprise.

Noted.  A more probable scenario given Apple's lack of cloud platform today.  Tomorrow is another day, though.

 

My understanding -- and I could be wrong about this because it's been a long time since I've really done any real coding -- is that Windows Azure is far more turnkey, designed to take out whatever hard lifting there is of developing and maintaining on a LAMP stack.  That's why it's a PaaS solution.

 

Also, I'm pretty sure Windows Azure supports development using a number of languages that are popular with web developers (e.g., Ruby). 

It's unlikely that this will do much to attract the scrappy start-up crowd, but Microsoft doesn't have to be all things to all people.  Taking the lessons learned from these start-ups and creating new opportunities for its customers is a perfectly good way to proceed.

 

Better to have an objective view of the risks and rewards of MSFT, right?

 

There's a fine line between enthusiastic and delusional.

 

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It's unlikely that this will do much to attract the scrappy start-up crowd, but Microsoft doesn't have to be all things to all people.  Taking the lessons learned from these start-ups and creating new opportunities for its customers is a perfectly good way to proceed.

 

Yeah, the guys I know who are part of the scrappy start-up crowd tend to be fans of Amazon and Google.  And most of them use Amazon AWS.

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I'm just suggesting we try to be rational about our investee companies.  When one is invested in MSFT, it's easy to fool oneself into believing that AAPL is behind in the cloud or that WinPhone is just as user friendly as iOS and Android.  If you own GOOG, it's easy to fool yourself into thinking that Bing will never make inroads and that it poses no threat to Google's search engine.

 

Better to have an objective view of the risks and rewards of MSFT, right?

 

Sure totally. But for MSFT the price is cheap, the pipeline very strong and moats still exist. Moreover MSFT is attacking new markets that have already been defined by the competition and may be able to put its existing weight in the balance along with partnerships to get to critical mass (which it already has done successfully a few times). So without being overly optimistic, we are paying little for a story that is only waiting for a more realistic valuation.

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