10 Themes for 2011

10 predictions for 2011 published in the January edition of CE Vision.  You can see the entire issue here.

1)      The unemployment rate will end 2011 close to where it is today

During the muted economic recovery many metrics and measures have significantly underperformed past economic recoveries despite the fact that the significant depth of the 2008–2009 recession should have been followed by a steeper recovery. The rate of unemployment is one of the most noteworthy of these underperforming metrics. While the economy will begin to more fully recover in 2011, the unemployment rate will not.

on Kindle Pricing Part II

Last week I provided an estimate of the implied revenue Amazon expects to earn in advertising from the newly discounted Kindle with Special Offers. I happened to catch MG Siegler’s post on TechCrunch on the same topic.  Siegler takes an approach I heard frequently immediately following the announcement, namely that $25 isn’t a strong enough discount.  Amazon should have been more aggressive and marked the device down to $99 – then we’d be talkin’.

I agree with Siegler that this is part of a broader pricing experiment for Amazon.  Amazon loves to experiment with pricing (among other things) and by so doing they can more accurately estimate demand elasticity (among other things). Thus, the recent price cut could have simply been an info gathering exercise. On the other hand, Amazon has on several previous occasions cut the Kindle price so I imagine they have a good handle on the shape of the demand curve as well as demand for ebooks (additional books sold) as a result of additional devices moving into circulation. As I wrote, Amazon could have arbitrarily picked $25 – it is after-all a very round number.  In this spirit, I don’t agree with Siegler where he suggests Amazon “must have looked over the potential numbers from advertising and determined that $114 was as low as they could go.” They could have gone lower, but opted not to. And I don’t think that decision was heavily influenced by per unit revenue loss rates.  

The 360 degree solution

this was previously published in March 2008 in Dealerscope Magazine:

Ten years ago, consumers bought consumer electronics devices largely independent of the services and content they would eventually use in conjunction with those devices. Those times are gone.

As opposed to piecing together an a la carte experience by coupling hardware, software and services, today’s consumer is in search of a more robust, 360 experience. This 360 experience focuses less on what the devices, services and content can do in isolation and more on how they come together to provide the consumer with the experience they are seeking straight out of the box. This change is driving an important shift within the consumer electronics industry, as content owners, service providers and hardware manufacturers come together to create and provide a 360 solution.

Organizing Information

The most successful companies – especially in the digital world – will be built around organizing dispersed information (something I said I would expound upon).  Name a successful company in the digital space, and you will see data organization at its core.  AOL for example – while best known for its ISP business in the 1980s…

The Value of Advertising on the Kindle

Amazon recently announced they would sell a new Kindle with “Special Offers”version.  Kindle with “Special Offers” has the same specs as their WiFi-only Kindle but will include advertisements as the screen saver and on the home screen bar.  In exchange, Amazon will only change $114. 

In all likelihood Kindle hardware will one day be free (or close to free) because of cross subsidization (give away the hardware and monetize the content). The Kindle app for other devices is logically already free.  And of course, this go-to-market approach is common for other technology categories like gaming.  Gaming hardware doesn’t drop to zero likely in part because of the retail relationships that must be maintained by the OEM, but it isn’t uncommon to see it sold below cost at different times. With Amazon’s Kindle in other retail channels, this might be the approach Kindle takes.  You also don’t want consumers taking more than they’ll use.  With a registered Kindle account this becomes less of a concern.  I won’t be surprised if the Kindle with “Special Offers” remains exclusively available through Amazon because of the confusion it might cause in other retail chains which might help drive volume back through Amazon. 

Decision Curbs: How the Miracle on the Hudson will Impact You

Over the weekend I read William Langewiesche’s recent book Fly by Wire: The Geese, the Glide, the Miracle on the Hudsonwhich chronicles the role electronic control systems play in avionic safety generally and US AIR flight 1549’s miraculous landing on the Hudson river specifically. A fly-by-wire approach is something we will begin to see with more frequency.

In avionic application, the fly-by-wire approach establishes certain parameters that guide the actions of pilots – for example making it impossible to stall the airplane, or obtain more than 2.5Gs which could impact the integrity of the aircraft. Creating bounded ranges and cementing curbs allows for quick, decisive decision-making in times of distress.  Bernand Ziegler – the former head of Airbus, and champion of the fly-by-wire approach explains, “we give you guarantees so you can react as fast as you want without having to worry about breaking the plane.”…

Using Events to Drive Retail Traffic

BestBuy is apparently holding iPad supply so they will presumably have enough supply on stock and in the stores for an “upcoming event.” This highlights the delicate nature of retailing today.  Physical media is no longer the traffic driver it once was, but today’s traffic drivers aren’t providing the margin that retailers need so events have become the focus to drive…

The Future of Data (and the Death of Surveys)

The demand for “metrics” is increasing. At the same time, data availability is accelerating. More, the availability of survey software like SurveyMonkey has driven down both the cost and accessibility to survey tools. In economic parlance, we’ve seen both supply and demand shift out. As the chart shows, the end result is a lower price and a much higher quantity.  

This is in everywhere evident. Political and social issue polling has increased with a 24 hour news cycle, cable news channels, more independent research institutions, and think tanks. Surveys have become commonplace. I receive a survey invite each time I stay in a hotel, attend an event, close an account or any number of a host of activities. These invites enter my inbox with subject lines like “your opinion counts,” “please share your feedback with us,” “your recent stay at Renaissance,” or “would you recommend Hertz?”…

On Privacy

I’ve written about Xobni for Outlook in the past, but a recent experience illustrated the role data will play in the future and ultimate implications for privacy.  When it first launched I tried freecycle and several months ago I signed-up again to see how the service had evolved and was progressing.  Because I knew this…