Month: March 2011
This thing looks like a turd to me. Now, maybe I’m the idiot and the joke’s on me and Color is going to be a huge hit. But my figurative money says that the investors who funded these guys just flushed $41 million in literal money down the toilet.
- Out with friends (most of whom have iPhones or Android devices) and not only will I see a stream of their pictures, but also people around us whom I don’t know. I could see a picture pop up with me in it, and look around to see where it was taken from. I find this idea very engaging
- Talking with a friend that is out somewhere cool, I could see the pictures being taken by those around him, even if they aren’t his friends, and I don’t know them, to create a moasiac of sorts. This could help me better understand what he’s seeling and doing. If he’s trying to get me to come out to a bar or restaurant it may help me make a decision.
The app itself is buggy, and as of now I can’t find anyone using it (even in NYC), but it has promise.
One day I wanted to a new PlayStation 2. I think the new thinner one had come out, and I wanted to replace my old brick. I picked on up, turned on employee sale, and scanned it. The discount was 74 cents.
I was floored by this. How could a top selling entertainment product have such little margin? Surely the manufacturer is making a tidy profit by marking it up before letting it hit the retail channel, right? In fact, no. They are likely losing money. In the case of the PlayStation 3, the production cost at launch was over $800, and yet it was sold for $499. The same situation holds true for the two generations of Xbox consoles from Microsoft.
June of last year John Walkenbach posted on his blog an interesting observation regarding Amazon’s Kindle: The price has been decreasing at a linear rate. And at that rate, it would be free by November of 2011. Let’s actually assume for a minute that this is an accurate prediction. Why would Amazon want to simply give away the Kindle?
There is a common thread here: All of these devices require the consumption of some other product. In the case of video game consoles it’s game software, the Kindle has digital books and other content, and wireless devices have service plans, fees, and overages. By building a large installed base, a company is better positioned to generate higher lifetime revenues. Once a customer is locked in to a particular device, or ecosystem, they are more likely to stick with it and continue purchasing from that same ecosystem. A one time investment can lead to hundreds or thousands of dollars in additional revenue over the lifetime of the device. It may, in fact, even lead to the purchase of another device from the same manufacturer as they already have content which only works with that line of devices.
Let’s perform a little thought experiment. Let’s assume that the iPad was not supply constrained. What if Apple were to give the iPad away for free? It’s crazy, I know. What if Apple were to give away a $100 or $200 App Store gift card (not iTunes, just App Store) with each iPad purchase? Or Sell the iPad at or near cost? First, competitors would probably accuse Apple of dumping (which is not technically the correct application of the term, but I feel it to be correct in spirit) and go crying to the Department of Justice and Federal Trade Commission. Second, Apple’s gross profit margin would plummet. Third, iTunes revenue would presumably sky rocket. While iTunes revenue is not anywhere near a majority of Apple’s revenue, it is fairly significant at around 8% for 2010 (although it could be argued that App Store sales are not being counted in the iTunes number, but in the ‘Software, service and other sales’ line, as it is not clearly stated in their 2010 10-K). In addition to being a source of revenue, it is also a source of stickiness. Customers who become heavily invested in the iTunes-based ecosystem are much more likely to purchase another iOS device. This increases the lifetime value of a customer, which is a key metric that many people overlook.
Getting back to the Kindle, the idea of it being free at some point shouldn’t seem so crazy. The logistical complexities of delivering a physical book to a customer add expense that simply isn’t there with an ebook. Additionally, ebooks are DRMed to the Kindle creating that essential stickiness. Even if Amazon operations at a lower gross profit on these products, the savings from the reduced logistical complexity and the increased customer lifetime value should offset the expense of equipping every eligible customer with a free Kindle.
I find it fascinating that this strategy that is all but institutionalized in the video game industry is becoming more pervasive within other areas of the CE sector. Less frequently are people asking “What can this device do?” and instead are asking “What can I do with this device?” This shift in consumer perception of technology is driving some very interesting innovation in the pricing models used by these companies. As we continue to move focus away from the hardware and toward the platform, we’ll continue to see company’s looking for ways to grow their installed base, which will likely be a major win for consumers.
A jury awarded $60,000 to a man who lost his job after being exposed by a local blogger. John Hoff connected Jerry Moore to mortage fraud, and he was fired the next day from his job at the University of Minnesota where he was studying foreclosures.
Rosie Gray, Village Voice:
Moore couldn’t sue for libel because in order to win a libel suit, you have to prove falsity. Even so, the jury still thought Hoff’s posts were damaging enough to merit legal redress. For two years now, Moore and Hoff have been engaged in a legal battle, which has now culminated in the First Amendment being kicked in the shins.
Orkut failed to gain a following in North America, Wave came in like the Segway and went out like… the Segway, and Buzz was an, excuse the term, epic failure.
Now for something you’ll really like!
Marshall Kirkpatrick at Read Write Web:
If what we’ve heard is correct, the service will offer photo, video and status message sharing. Everything users share on Circles will be shared only with the most appropriate circle of social contacts in their lives, not with all your contacts in bulk.
This actually sounds pretty cool. I barely use Facebook because of this very issue, and a virtual social network that more closely mimics my real social network would be infinitely more useful.
Ironically, the man behind the idea left for Facebook.
Update: Liz Gannes at All Things D is now reporting that Google denies that they are developing any new social networking product. Shame, I think it’s a great idea.
Thanks to Marshall Kirkpatrick for the update.
As I predicted last week, Apple stole the show at SXSW and actually attended this time.
Daniel Terdiman, on CNET:
The fact is, the reason few are putting it in these terms is because it’s a given that Apple could pull this one out of its hat. It’s like air. It just is. Everyone’s amazed at what they pulled off. But find me someone who’s surprised.
It’s true, no one is surprised by this. As I said previously, Apple has fallen into a rhythm of disrupting just about every major trade show it can recently. What’s up next, anyway? CTIA?
I’m the blue dot.