19 April, 2012

Let's Talk About Sony

So, let's talk about Sony. I read an news piece this morning about Sony's plan to lay off 60% of EMI Music Publishing's employees when they take control of the firm they're paying $2.2 billion to buy. That's on top of the 20,000 layoffs they announced last week.

That's a lot of layoffs, but they all speak to an underlying problem at Sony that, I think, is going under-discussed (if nothing else). Like a lot of technology firms in the 1980's, Sony decided that the key to their future success was to be vertically integrated. Instead of just making televisions and VCRs, they'd make the content that was played on them. Now, to give Sony some credit, this line of thinking was based on some real and tangible concepts. First, the music industry, especially in the Japanese market, has a long history of hardware makers also producing content. From Edison's cylinders through to Japanese music giants like Toshiba-EMI, this isn't exactly new ground. Sony's own experience with the failed Betamax VCR format also showed them the risk of launching new technologies without guaranteed content at launch.

It's with these facts in mind that Sony purchased Columbia/Tri-Star in 1989. Also in 1989, Sony purchased CBS Records. Then, starting in 2004 and concluding in 2008, Sony brought BMG into their music stable. Alongside these acquisitions, Sony started Sony Imagesoft in 1989 to create and publish video games.

If it seems like Sony was focused on content creation in the late 1980s/early 1990s, you'd be right. Although Sony saw successful hardware launches during the 1990s, such as the Playstation, they had a frighteningly long list of failures as well. DAT, launched by Sony as an recordable alternative to CDs in 1989 failed to take off, at least in part because it was hobbled to prevent illicit digital copying of copyrighted content. Mini-Disc, launched by Sony in 1992, a portable digital medium, also hobbled, also failed.

As Sony launched hardware failure after hardware failure, their core businesses, televisions, CD players, VCRs, tape players and, later DVD players limped along with incremental improvements, but without any real or meaningful technological breakouts. Clearly, their energies and focus were elsewhere, with new investments coming in content on a regular basis. In new hardware technologies, Sony's presence became less and less pronounced. Instead of jumping into the mobile phone arena with both feet, Sony opted to partner with Swedish company Ericsson. Rather than be first to market with a cutting edge MP3 player that leveraged their Walkman history, Sony arrived late with a hobbled player, fearful of the digital music's potential impact on their music business. Whereas Sony's Trinitron brand had become synonymous with quality in the world of CRT televisions, Sony opted to use other's hardware when they launched their first plasma screened HDTVs and were slow to shift to LCDs when the market began to shift away from plasma. All the while, Sony continued to price their hardware products as though they were the industry's pinnacle of both quality and innovation.

My argument then, is this. Instead of focusing their energies on bringing new and innovative technologies to market, Sony decided they'd create a safety net for themselves. They became more and more risk adverse as their tech products failed and their content products came under assault from piracy and decreasing margins. This is the downward spiral that they find themselves in today. I honestly don't believe that it's possible for Sony, in their current structure, to turn this around. Fundamentally, the goals of the content and hardware arms of the business are at cross-purposes to one another. Content wins from being platform agnostic and hardware wins by being content agnostic.

I believe Sony must separate its content and hardware businesses. The hardware side of the business needs to innovate without fear. When Apple launched the iPod in 2001, they did so with a plan for the iTunes store (which finally opened in 2003), but without any actual digital download model in place. They knew that much of the initial demand for the iPod would come from people with illegally downloaded MP3s from Napster and other sources. Because they had no content arm that was threatened by this, they were able to go to market without reservations. When Sony went to market with their first digital music player in the 1990s, instead of using the already ubiquitous MP3 format, Sony used the proprietary ATRAC format, again, to prevent a negative impact on their content business.

The content side needs to get ahead of new technologies and revenue models, perhaps sacrificing short term profits for long term category growth. Instead of fighting new technologies and delivery models, they might be well served to get out ahead. Perhaps they could take a page from the app store model? Instead of selling a few hundred back catalog music titles for 99¢, they could sell thousands or millions for 2¢ or 10¢ each? How about the same logic for films? Force 10 from Navarone, a film from 1978 is available on Blu-Ray for $11.99. The price to download the film? $9.99. Now, a film made in 1978 is, in 2012, fully amortized. Any costs associated with the film, save digitizing it and marketing it as a digital download, are already recouped. Anything Sony makes on this film is pure profit. I've really got to want to see this film to spend $9.99 for it. On the other hand, it's a low barrier, low risk purchase for $1. Does Sony make more money selling Force 10 from Navarone to 10,000 fans or 100,000 casual viewers? As long as Sony (and all content producers) overvalue their output, they encourage consumers to avoid or steal that content. As a restaurant operator once said, no restaurant ever went broke with a full dining room but more than one have failed with high margins.

Both groups, I think, have a chance to succeed separately, but together their respective needs will pull the business deeper into a death spiral from which no part of the business will survive intact.

21 February, 2012

Your WiFi Network and Your Customers

How many times has this happened to you? You sit down in a restaurant, whip out your iPhone and try to log on to the network titled, say, "Joe's Restaurant" only to be rebuffed for lack of a password?

OK, how many times have you bothered to ask for that password? How many times have you been told, when you asked, that either they don't have a network or that it's not for customer use?

There are a lot of reasons to have a WiFi network in your business. First and foremost amongst them is to help you conduct business, using it to connect your back office systems, printers, registers and the like without the installation of hard wiring. It makes sense that if you're using your network to support your business tools, you don't want customers or others accessing your network.

But, as more and more people utilize devices with WiFi capabilities, such as smartphones and tablets, those networks that you've created to serve your business needs become visible to your customers and visitors. Rightly or not, once your customers know you have a network, they're going to expect to be able to utilize that network. If you fail to provide a service that customers receive from at least some of your competitors and your customers know that it is possible for you to provide that service, you've created an unmet need amongst your customers. Unmet needs lead to dissatisfaction and, over the long haul, can significantly hurt your business.

So, what should you do? Should you offer up your network to your customers? Should you share your potentially finite or costly internet bandwidth?The answers depend on factors that are unique to you and your business.

If you're only using your network to access the internet and you have sufficient bandwidth to share, then share away. Make sure that your computers and devices on the network have firewalls to protect them from intrusions. If you're in an area with other businesses nearby, utilize a password system to ensure that use of the system is limited to your customers and not to your neighbors and their customers. Even though slow connection speeds can frustrate you, your customers will likely give you a pass for problems, cognizant that it's something beyond your control (if they even notice).

If you need your network to be secure and completely private, you have other options. First, you can add another wireless router to your network, attaching it to your existing router. Set up your first router (or cable/dsl modem, if it has a built in WiFi router) to be open and then add the second router after the first, making it protected and available only to your devices. Name you first network (the open one) something like "Joe's Restaurant - Guest". For the other, private, network, follow the steps below.

If you can't or don't want to provide network access to your customers (such as closing off your private business network), you have a couple of options. The cleanest is to turn off SSID broadcast for your network. Although you can still connect devices to the network and it will run normally, customers' devices won't "see" the network and, therefore, they won't know you even have one. The downside to this is that you'll need to manually enter your network information into your devices to connect them, which means more work for you on the front end.

Another option is to give your network a name that doesn't create a false expectation amongst your customers. "Joe's Restaurant" leaves no doubt as to whose network customers are seeing. On the other hand, "DFF-63LK-Secure" could be anything. Customers seeing this have no idea whether this is your network or not, thus it doesn't create that perception of an unmet need.

Whether you take these thoughts to heart or not, know that your customers are judging you on them. Their perceptions are your reality. Embrace that or suffer the consequences.

Richard Mendell is a marketing expert with more than 15 years of customer marketing and brand management experience in the restaurant industry. He is currently consulting for restaurant, retail and CPG clients in the Oklahoma City market, but is open to long term marketing roles throughout the United States.

18 November, 2011

Why not a Series Hybrid Engine Swap?

So, I've been thinking about this for a while. As some of you may know, I have an ongoing fascination (some might say obsession) with Full Size Jeeps (FSJs). That's the classic full size Wagoneers, Cherokees and Pickups built between 1962 and 1991. In my opinion, these are the original SUVs and they're damn near indestructible.

Unfortunately, they came with some engines that just don't cut in the modern world. Over the years, they came with an assortment of Buick, Kaiser and AMC engines. Now, don't get me wrong, there's nothing inherently wrong with any of these motors. At the time, they were competitive (well, except at the end), but, by today's standards, they're underpowered, inefficient or both.

Up to now, there's really only been two options...
  1. Spend lots of money upgrading the existing drive train by adding things like fuel injection, headers and exhausts,  overdrive transmissions, etc. It's all possible and gives you the satisfaction of keeping the "soul" of your Jeep true to it's mutt roots.
  2. Swap in a modern drive train from another vehicle. Traditionally, small block Chevy V8s have been a common choice for this, but the current range of LS and Vortec engines are about as easy and deliver a heck of lot of both efficiency and power for what's not a huge investment.
Now, I've spent a long time vacillating between these options. For me, I like the idea of having a "modern" AMC V8 with fuel injection and the like. On the other hand, the Vortec is a great truck engine, it mates up cleanly with a modern overdrive automatic and, perhaps most importantly, junkyards are full of them.

But because I'm always trying to figure out what an optimal solution could be, I'm thinking outside the box. I put together a list of things I'd want in a dream SUV.

  • Off Road Performance
  • Reliability
  • On Road Performance
  • Economy
  • Comfort
Now, out of the box (or in it, if you like the wood grain tape) these FSJs do well off road and, modern features like automatic climate control notwithstanding, they're pretty comfortable. They aren't terribly reliable though (to be fair, the newest ones out there are 20 years old), they struggle to cruise at 75 and they might get 15 MPG downhill with a tailwind.

So, all that tedious set up aside, here's what I'm thinking...

Why not take a page from the diesel train locomotive book and do a series hybrid system?

  • Smaller diesel engine (such as a VW TDI) will provide ample power and, running at more consistent loads, will be ultra efficient and reliable.
  • Electric motor has huge torque from zero RPM and can run at high speeds.
  • No need for a traditional transmission, saving about 250 lbs.
  • Supercapacitors can take the place of batteries, since they'll be used to bridge load variation between current engine output and electric motor needs, such as during acceleration or hill climbing, rather than for primary power storage.
  • Massive amounts of custom fabrication.
  • Needs custom control systems and software to run said systems.
  • Will still be a 20 plus year old vehicle with associated concerns.
  • $$$$$$$
Now I'm guessing that's the main reason no one's done one of these already. I don't think any of the issues are insurmountable. Essentially, what I'm suggesting is a variation on what Fisker is doing with the Karma without the pesky "plug in" part that's great for being green but doesn't really add value to what I'm proposing. It's meaningfully different from the Chevy Volt because in my approach, there's absolutely no connection between the diesel engine and the drivetrain except for wires.

I'm not sure if this is something I'll ever get around to doing, but I thought I'd throw my hair brained idea out there. I'm open to suggestions and criticisms.

30 July, 2009

Cell Phone Voicemail Scam

I happened to read a great article by David Pogue in his Circuits column in the New York Times about cell phone voicemail and those annoying mandatory voicemail instructions you seemingly can't avoid.

Based on his math for Verizon's profits off of this and then accounting for the other three of the "big four" in cell phones (AT&T, Sprint and T-Mobile) and then the other players, the industry, in the US alone, is raking in about $2 billion a year.

Now I'm all for making a buck and if there were an easy way to skip these, then I'd be all for it. If you're able to not pay for something and you do anyway, I can't feel too sorry for you. On the other hand, if you make someone pay for something they don't need or want in order to get to a basic function, then that's just not cricket.

So, I suggest the following. Unless you have something really important to say, don't leave a message. When (or even before...if they're going to pick up, it doesn't take seven rings) the voicemail picks up, hang up. The other person can see you called and they can call back. Easy as pie and pretty much what we did back in the dark ages of pagers.

Just my 2¢.

16 July, 2008

Getting Serious About Fuel Efficiency In the USA

So, I just finished reading a recap of "Maximum" Bob Lutz's News Conference yesterday (7/15).

OK. No surprise we're not getting the small, fuel efficient Chevrolet Beat (Spark?). It's not designed to meet US safety standards.

Here's a novel thought though...let's change those standards. Let's stop forcing auto makers to make cars designed to protect people too stupid to wear their seatbelts. It's funny that conservative American politicians criticize the Europeans as running nanny states and then vote for regulations in the US that are so abhorrent to the idea of personal responsibility.

If I want to drive a small car with limited crash protection and no airbag in order to pay less for it and get better mileage, isn't that my call? Apparently not.