A by-product is formally defined as "'output from a joint production process that is minor in quantity and/or net realizable value when compared to the main products". The search and retail services that Google and Amazon respectively provide require a lot of computers and these computers invariably have an excess of hard drive capacity even if they are using storage area networks or similar. (storage is purchased as a step function so there always is some amount of excess capacity even if very small) This means that their primary product (search and retail) generates storage as a by-product. Offering storage related services is a way to recapture some of the value of this excess storage which would otherwise merely be a cost.

Nobody said it was free and by-products aren't free either though they can be very very cheap sometimes. They simply aren't as valuable in the marketplace as the primary product. From an accounting standpoint it is a sunk cost - the money has already been spent for a separate purpose and any (rational) decision making about what to do with the asset going forward should not factor into the equation.

Excess capacity for any company on any product can be normally be sold very cheaply. This is how foreign companies can sometimes sell products for what seems like ludicrously low prices even without government subsidies and why accusations of dumping are hard to prove. Once the fixed costs of the product have been recovered, anything the company can sell it for after that is pure profit. They basically can sell it for as low as their variable cost without losing money. Google's variable cost on a unit of data storage is extremely low - probably no more than a few cents per megabyte if not less. It's not free but it's pretty close. A great example of excess capacity with a low cost is text messaging for cell phones. The cost to AT&T to send you a text message is very very very low because the mechanism to send the message simply rides on some gear that has to be there anyway for a separate purpose. Once the decision to put the cell tower in is made, text messages are almost pure profit even though technically they could be considered a by-product. (now their market value is high enough that by-product might not be an accurate description anymore though...)

I'm a cost accountant and what you said here is 100% correct. They are able to achieve economies of scale that few others can match.

You are conflating two accounting issues that are properly separate. Google gets storage very cheaply on a per-megabyte basis because they buy huge amounts of it and have cost effective infrastructure to make use of it. They end up with large excess amounts of it because of the nature of their primary business (not data storage) which effectively makes it a by-product to Google. From an accounting standpoint this is no different than how oil refineries generate natural gas as a by-product when refining oil into gasoline. They would have to have the storage whether or not they went into the data storage business. By going into the data storage business they are attempting to get market value for that by-product rather than simply writing it down as waste. Either way that excess capacity is a by-product. Calling Google's excess data storage capacity a by-product is logically correct.

Sure they are. I assure you that the priest who is fully supported by his congregation is taxed on his "earnings". A housewife still has to file and is responsible for the taxes on the spouses income even if they had no role in actually earning it. All those people still pay sales, use, gasoline, excise, etc taxes. It's essentially impossible to not be a taxpayer on some level.

I run a company that makes wiring harnesses and I am an engineer (as well as an accountant) myself. I assure you that there are a LOT of idiots who would would design such a stupid system. I get to deal with some of them on a semi-regular basis.

We like to pretend here on slashdot that engineers are universally good at their job and always do quality work but I have several file cabinets full of evidence 10 feet from where I sit that proves that too many engineers are monumentally incompetent idiots. On a daily basis I see drawings that are incomplete, incorrect, badly designed, occasionally dangerous, specify incompatible or needlessly expensive parts, difficult or impossible to read, sloppy, cannot be manufactured and even just plain incoherent. I have seen precisely 7 product drawings (out of hundreds) in the last 5 years where I could build the product detailed on the print without asking even a single question or correcting some error. This is quite simply bad engineering by people who aren't very good at their jobs.

The fun part of engineering is figuring out a clever solution to a problem. The harder and less fun part of engineering (but probably the more important part) is documenting the solution in such a way that others can understand and replicate your solution and adjust/debug it if necessary. People who can write good quality work instructions are a shocking rarity even among very smart people. A lot of engineers will take easy shortcuts even when it results in a worse and more expensive product in the long run.

Not even remotely true. Governments are perfectly capable of earning money when they choose to. Governments can and do own things and can behave very much like private businesses if they want to. In China and Egypt and Russia (and many more) have huge swaths of the private economy are outright owned by the government. The fact that the US government generally refrains from trying to make a profit and behaving like a private enterprise doesn't mean they cannot or do not. For a time in the very recent past the US government literally owned GM and Chrysler which means the US government was for a time in the automobile manufacturing business.

Not to mention that a government can literally "print" money if they want to. The Federal Reserve technically makes a profit every year though that doesn't really mean much in reality.

Some do and some do not. People who stay home to raise children often do not earn any money. Religious leaders are often supported by tithes or donations earned by others. Elected officials and judges are typically supported by taxpayers.

Not necessarily and only after the fact. A hotel chain has a reputation to maintain and generally they are operating as ongoing concerns. AirBnB users (both guests and renters) are under no such long term pressures.

I think that is overly cynical. The government and its elected officials generally do care that the people under their care are safe and happy, even if their ultimate motivation is just to get re-elected rather than some deep level of humanity. And a government being concerned about attempts to circumvent their powers of taxation shouldn't be terribly surprising. Taxing travelers is a great way to bring money into the area from outside without having to tax the people that elect them. Shouldn't shock anyone that such an easy taxation target would be valued highly by government officials who want to get re-elected.

That is true but not really relevant. If someone is considering a long term stay, chances are they are going to look the place over in person before any money changes hands. Not so with a short term hotel-style stay where you will be in and out in a short amount of time. I'm not saying AirBnB is a bad thing but what you are saying is a false equivalency in most cases. There are some serious issues to think about here is all I'm saying.

So clearly we can extrapolate from your experience that no one ever has had or will have a problem... [/sarcasm]

Look, most people probably will never have a problem because most people are decent law abiding sorts. Those aren't who we are worried about. It's the few really bad ones that hurt, steal from or defraud or otherwise harm someone. If your experiences have been great, that is wonderful but that doesn't mean it isn't worth worrying about both for the visitor and the host. If you want to take the risks involved in using a service like AirBnB I have no problem with that but that doesn't mean there aren't some very important public health and safety considerations to address.

When we get to any actual science or engineering then I will pretend to care. Until then it really is not important in a forum like slashdot to anyone but a few overly pedantic people who don't know when to pick their battles. Just because people here generally care about science and engineering doesn't mean we can't deal with a little obvious imprecision in a description of a shape. No one will be negatively affected by the fact that it isn't truly a torus and most of us are well aware that it isn't actually a torus by the proper defintion. It's like pointing out that the Saint Louis Arch is actually a catenary instead of a parabola as is commonly assumed. Interesting but ultimately not genuinely important 99.999999999% of the time.

In some cases the answer will be yes. If I found my out my neighbor had turned his house into a de-facto hotel, I would likely be pretty upset and rightly so. That potentially affects me and my property so you better believe I'm going to want a say in the matter. Furthermore there are various important liability, safety and taxation concerns that need to be addressed before any sane person should give a blanket go-ahead.

The (probably few) customers who don't get scammed by shady "hosts". The neighbors who don't have to put up with living next to a de-facto hotel which the property is almost certainly not zoned for. The taxing authorities and by extension the local citizens who are probably not receiving the benefits of tax revenue they would otherwise receive. The normal hotels and their employees who lose revenue they likely otherwise would have received.

Just because something is new doesn't mean it is necessarily good. I don't have a problem with Air Bnb and I actually do wish them the best of luck but just because they think their product is "innovative" doesn't automatically mean it is a good idea. I can see potential problems with the service that are serious and need to be addressed in a more adult way than screaming "KILLING INNOVATION" to anyone who will listen.

Their well deserved reputation isn't relevant for once I think. Microsoft doesn't need to sell at a loss here to gain market share at Dropbox's expense because they almost certainly have a huge cost advantage. Like for Google, storage space for Microsoft is a by-product of their other product offerings such as search or Office in the cloud. I'm certainly no fan of Microsoft's (and have 20 years of postings to prove it) but I really don't think there is a credible case for predatory pricing to be made here. Dropbox has a flawed business model and as you point out they should have sold the company when they had the chance. Now they will get crushed by any large firm that has storage space to spare (specifically Google, Apple, Microsoft, Amazon, Facebook, etc) and a desire to slap a friendly interface on it because by-products are by definition cheap.

Probably not applicable here because storage space to Google is a by-product, not a loss leader. By-products by definition are generally very very cheap which means that Google's cost for the service is pretty close to zero - at least far closer to zero than it is for Dropbox. Otherwise the unused storage space would be a cost (waste) rather than a revenue stream. Google doesn't have to sell it for a loss because they have a huge cost advantage over Dropbox. They can sell it far below Dropbox's cost and still make money doing so because storage is not their primary business. Storage to Google is a by-product.

This is very similar to the problem Microsoft has in trying to compete with Linux. Companies that develop for linux have their primary line of business elsewhere -services, hardware, etc. For example IBM sells services so they don't actually have to make money on linux. Microsoft on the other hand currently has to make money selling the software so they can't just give it away. This puts certain constraints on Microsoft's business model.

You are almost certainly mistaken in your presumption that they are selling at a loss. Storage space for a company like Google or Amazon is a by-product. It would otherwise be waste to them so they can sell it profitable very very cheaply. They aren't dumping here because they have a genuine cost advantage.

Frankly, Dropbox has a rather dumb business model that I really don't think has a bright future. I say this as someone who actually uses Dropbox and generally likes the product. But I really don't see them being successful as a stand alone business. They have the same problem Microsoft does when competing against Linux. The costs for the competing products are just genuinely lower.

It's not illegal when the company pricing lower has a genuine cost advantage. Google and Amazon and Microsoft have VAST amounts of surplus storage space due to their other businesses and data storage to end users for them is a by-product. By-products are almost by definition extremely cheap because if they don't have any marketable value then they are waste. Google and the others are simply selling something cheaply that would otherwise be nothing but a cost to them. That's not predatory, that's simply smart business.

I use Dropbox but its business model is dumb and they should have sold the company when they had the chance. At the end of the day they are selling megabytes of storage which is an undifferentiated product. Putting an easy to use interface on that isn't all that hard to do and any sufficiently well funded competitor can easily replicate what they've done. Why you think companies like Google should try to replicate a flawed business model like that is a mystery to me.

Who says they are selling at a loss? Storage space is a by-product for Google, Amazon and Microsoft. They have a lot of storage space that would otherwise go to waste from their primary businesses. They can afford to sell it very cheaply because otherwise it would be nothing but an expense (waste) for them. Also bear in mind that just because they offer it to end consumers (sometimes) for free sometimes doesn't mean it is actually free. As a user of Google Drive I'm not their customer unless I actually pay them - I'm their product. The customer is the one who buys the advertising. Their product is (theoretically) my attention for advertisers and storage space (like email and search) is just another way to get me in front of them.

It is sort of but the real purpose of Android is so that Google doesn't get shut out of mobile advertising by Apple, Microsoft or others who own their own mobile platforms. It's not really intended to be a profit center to Google but rather to keep others from shutting off Google from future revenue streams as mobile becomes increasingly important. Don't think for a moment that if Google had to go through Apple or Microsoft or Blackberry that those companies wouldn't take their pound of flesh or even simply keep Google out altogether if they could.