W. P. Carey MBA - Executive Program - Arizona State University

A new marketing model: what is the real product?

There was a time early in the introduction of the desktop computer when it was widely thought that the computer itself could be given away because it was merely a pretext to sell peripherals:  floppy drives, hard drives, monitors, printers and the like.  Many still feel this is the case with inkjet printers where the printer costs a third of the first investment in ink (Lexmark has sold printers through Cosco that cost $39 and the ink for the printer costs $110).

The prototype for this type of marketing goes way back to Gillette and Xerox.  When the first safety razor came out, it was a substitute for a straight razor.  A straight razor was expensive and a safety razor was relatively cheap.  But a straight razor lasted forever, although it required work (sharpening); the safety razor handle lasted forever but the razor insert was disposable and new ones had to be purchase (but they required no work).  So was the product the safety razor or the razor blades one had to buy forevermore to make it work?

Xerox had s imilar situation when it introduced the first copy machines.  Since they were new and expensive, it wasn't clear that they would prove that useful to many offices.  So Xerox provided the option in which a company paid a fixed fee per copy rather than purchasing the machine itself.  As everyone now knows, copy machines generate their own need and Xerox ended up being paid many times over what the machine would have been sold for originally, because they sold copies rather than a copy machine.

This discussion is coming up again with regard to the new iPod: is the iPod the product or are iTunes the product.  Using the Gillette analogy, is the iPod the loss-leader (the handle) and the real product is the iTunes (razors) bought from now on to make the iPod useful?  This site argues that the iPod actually is a product all by itself:

Apple makes very little money from selling songs, but it does make some profit. Apple makes a LOT of profit from selling iPods. So the song is the razor, not the iPod, and that's because the price sensitivity is currently about the content, not the player.

Apple's margins on the iPod Mini are about 30 percent from the retail channel and 60 percent through its own stores, so let's say that's an average of 35 percent or $75 on an iPod Mini. Apple makes about $0.20 on each song. So to make more money from the songs than from the iPods they'd have to sell 375+ songs per iPod. Apple has sold 250 million songs to date and has sold 10 million iPods. That is 25 songs per iPod, not 375+.

Bloggers report on Iraqi elections

The Wall Street Journal has a great round-up of reports from bloggers in Iraq covering the election (click to enlarge photo of voters lined up to cast ballots -- and visit the blogs listed in the article for additional photos).

It was a miraculous election

That's a quote from Jeff Jarvis, who has maintained active links with Iraqi bloggers during the lead-up to the election.

The fact of the election is a powerful message to the rest of the Middle East (and they're hearing it); it is a message to those who said that Iraq is not ready for democracy; it is a message to the terrorists and murderers there who would try to stop the democratic inevitability.

But yes, of course, there is a tremendous amount of work to do.

Hell, democracy in America still requires work.

Slipping coverage of Iraqi elections at the NYT

A New York Times article on the Iraqi elections yesterday reported a "party atmosphere" in Baghdad and had this paragraph at the top of the story:

But if the insurgents wanted to stop people in Baghdad from voting, they failed. If they wanted to cause chaos, they failed. The voters were completely defiant, and there was a feeling that the people of Baghdad, showing a new, positive attitude, had turned a corner.

During the day yesterday this paragraph slipped lower and lower in the on-line article.  When the hard-copy came out today, the paragraph was gone entirely and the new headline for the article is "Bomb Kills 35."

Scrappleface has an article today with the headline "Iraqi Voting Disrupts News Reports of Bombings."  Some mainstream media had to take a short break from reporting bombings and showing bodies to show lines of millions of Iraqis exercising their right to vote.  The Scrappleface article was supposed to be a joke, but the New York Times made it not funny by making it not a joke.

Here is a sampling (with commentary) of mainstream newspaper headlines yesterday:

NYTimes.com headline: "Iraqi Voters Turn Out in High Numbers Despite Rebel Attacks Killing Up to 36"
Guardian headline: "Iraqis vote as attacks kill 22"
Chicago Tribune: "Update: Iraqi voters defy attacks"
Washington Post: "Iraqi Turnout Appears Strong as Voting Day Ends"
MSNBC: "Voting amid violence"
FoxNews: "Turnout High on Violent Day"
BBC: "Iraq votes as attacks hit Baghdad"

Today, the New York Times headline indicates the main news was not the 70%+ turnout in the face of violence but the bomb that killed 35.

UPDATE:  Here is the progression of changes in headline for the NYTimes article:

TIME       HEADLINE
09:24      High Turnout in Baghdad Points to Early Success
10:24      Amid Attacks, a Party Atmosphere on Baghdad's Closed Streets
18:26      Insurgent Attacks in Baghdad and Elsewhere Kill at Least 24
20:50      Attacks in Baghdad and Elsewhere Reportedly Kill Several Dozen

For an alternate point of view, you can read Kevin Drum, who explains that web headlines can change over time (and refers to those who pointed out this particular change as "wingnuts").  Although the original point wasn't about change in itself but what the headline changed to, his commentary is representative of those who see no problem here.

 

Mac Mini, market launch II?

The Mac Mini can fit into a lot of roles, but the one that has been getting the most buzz is one it isn't quite up to.  Yet.

Practically since the moment the Mac Mini was announced, the online Macintosh communities have been ablaze with commentary from people who'd like to use one of these suckers as a DVR and A/V hub. From DealMac to AVSForum to PVRBlog, there's a sizeable cohort of tech-savvy folks who look at the Mini-Mac and say, "That belongs right next to my friggin' huge HDTV."

Unfortunatley for all those folks (myself included), the Mini just isn't built for that task. The hard drive is too small and too slow (it's just a 4200 rpm laptop drive), and the video card and G4 processor don't have the horsepower to play back HD video. The current models of Minis are designed to be either second computers for Mac owners, or first Macs for Windows users who're fed up with Microsoft and want to see how the other side lives.

But.  That's just the first model.  Who's to say there won't be an A/V Mini coming down the pipe from Cupertino in the future?

Read the whole post -- lots of interesting technical details are provided.

Words fail: tsunami death toll update

To repeat -- and rephrase -- Edmund Burke's great observation that there are some events so momentus it is impossible to say nothing and impossible to know what to say.  The tsunami death toll is now at 280,000 and it is reported that 1,000 bodies a day are still being uncovered in the worst-hit areas:

Hundreds of bodies are still being pulled daily from the rubble in Indonesia, while many more lie unidentified in mass graves in Thailand as tsunami-hit countries struggle to even count their dead, let alone identify and bury them.

With 11 Indian Ocean countries suffering deaths and more than 50 other nations reporting citizens killed, the disaster a month ago touched an unprecedented number of communities.

In Indonesia’s worst-hit Aceh province more than 1,000 bodies a day are still being recovered.

Wow.

Steps of separation

They are getting fewer.  Here is a picture of a person taking a picture.  It was posted.  The picture-taker in the picture found the picture on-line and published the picture she took at the same site.  The picture and its meta-picture at the same site.  Check it out.

Comments on the problems of the homeless

For many of them, the root problem isn't their lack of a home, it is their lack of mental stability.  If they were given a home, they wouldn't know how to use it or keep it.  What many actually need is to be kept by a competent institution so they aren't a danger to themselves or to others.

Jeff Jarvis and Glenn Reynolds have extended posts, with links, on the problems that have derived from the deinstitutionalization movement -- a process that has put many at risk on both sides of the spectrum.  According to Jarvis,

the real issue isn't homelessness. It's insanity. The laws in this country make it impossible to commit and help even the obviously and often the dangerously insane.

I say that One Flew Over the Cuckoo's Nest is as much at fault as any politician, for it made the institution frightening and the people who run it bad guys.

Reynolds provides vivid evidence of the risks associated with deinstitutionalizing dangerous people:

My wife thinks that the de-institutionalization movement was a dreadful mistake, and that a lot of people have suffered as a result. And they're not just the people who were deinstitutionalized, either, though they suffer the most. Her documentary on the Lillelid murders notes that the ringleader of the killers was discharged from a mental hospital after 11 days -- actually a fairly long stay by today's standards -- despite a clear recognition that she was dangerous to herself and others; if she'd had proper treatment, the family that she and her confederates murdered would still be alive.

The murderer is getting treatment now -- in prison -- and is doing much better mentally, but the price of admission to that treatment is typically a felony committed against the public.

Mixing media in sports

The evidence in sports reporting is that they don't mix -- one form, TV and radio, destroys the quality of the other, newspaper columns.   There's a lot of evidence accumulated in this interesting article indicating that covering sporting events, writing about them, analyzing them, ... these things are no longer the real goal of many sports commentators.  The real desire is to be a media star on a sports program.  One columnist, Stephen A. Smith of the Philadelphia Inquirer, goes to many media events, but, the paper's editor said, he still "puts his column [for the paper] first."  Want evidence of his "dedication?"

On the night of the NBA draft, Smith BlackBerryed in his column between television appearances.

... Once upon a time, maybe five years ago, anyone filing a crucial column via a thumbs-only device would have been busted down to covering high-school cross-country meets. Being a columnist at a major daily paper was every sportswriter's dream job. Legends like Jim Murray at the Los Angeles Times and Shirley Povich at the Washington Post were the most beloved guys at their papers. They'd write a cherished column for 30 years, and that was it. There was nothing else to do, no higher job to attain. Now, a sports column is nothing more than a springboard, a gig that starts you on your way to becoming a multimedia star.

As with many things in sports media today, television—and more specifically, ESPN—is to blame.

It's a great article on the dearth of great articles -- and great article writers -- in sports today.

Water speed record attempt this winter

The boat at right is 1/10th-scale model of the boat American Challenge that will be going for the world water speed record this winter.  It's pilot, Russ Wicks, is aiming at hitting 400 mph.

The boat's design is the result of a team of consultants running computer simulations and using advanced materials from the aerospace industry.  To make sure Wicks will fit the cockpit safely during the boat's speed run, they designed a "digital pilot" to simulate Wicks' movements to make sure he can reach everything he needs to for control.  The team has spent about $5 million so far in their effort to set the record.

Wicks isn't the only contestant this winter -- in Australia the boat Aussie Spirit is getting ready for the challenge, too.  It's pilot, Ken Warby, designed the boat in his kitchen and built it by himself -- along with the trailer that hauls it -- in his backyard.  He is a very long way from spending anything near what the American Challenge team has spent.

Is there even any competition here?  One wouldn't think so from the information above, but it leaves out one crucial datum:  Ken Warby set the current record of 317 mph in the Aussie Spirit a few years ago with the same used jet engine it now has.  He has fitted an after burner to it to get the added speed.  Wicks has so far maxed out at 221 mph.

We'll know by Spring who, if either, gets bragging rights.  They are both literally betting their lives that they can set the new record.