A recent NRF study shows about 12.7 percent of consumers plan to buy tech this Mother’s Day. Sixty-six percent plan to buy flowers.
NPD is reporting 85 percent of U.S. consumers say price will be an extremely important/important factor in deciding where to shop in the near future. This is consistent with CEA research that continuously finds price and feature set are the two primary factors influencing purchasing decisions. While other factors – notably environmental-related factors like use of recycled materials or energy consumption – have increased over time, price and feature set remain the top two factors driving purchasing decisions.
Lately, American Express has been very active integrating promotions with social platforms. I first noticed foursquare deals a few months ago and this past week noticed Amex has several Twitter-related promos running. Both leverage Amex’s recently launched (relaunched?) Amex Sync. Essentially, Amex card holders get pre-specified discounts when they perform certain tasks on social platforms (ie check-in somewhere using foursquare or tweet using a certain hashtag) and use a linked Amex card to make purchases.
It is any interesting approach for several reasons. First (as in the case with twitter), it broadcasts both that the user made a purchase somewhere, but also that they made a purchase using their American Express card. In the case of foursquare, I imagine most users check-in to a location before they make a purchase. Seeing the Amex deal listed provides a reminder to use the linked Amex card right before the purchase is made. Finally, social is largely a mobile phenomenon – something I plan to expand upon later. This provides a natural intersection from which to influence purchasing behavior.
Over the last 2+ years, Wall Street analysts have pounded BestBuy on the size of their big box store fronts. Best Buy recently announced another 42 store closures – bring to 50 the total stores that will shutter in 2012. Best Buy has also worked over the last year to shrink their footprints. In some instances they have sublet some of their store square footage and in other instances they have given space back to the landlord. In their announcement last week, they recommitted to build out the smaller-format Best Buy Mobile store concept and remodel existing stores with a new Connected Store format.
But are overall square footage and the footprint of their stores, the key issue? Wall Street’s motivation is driven by shifting dynamics within the consumer electronics space. Sales of large-format devices like televisions are declining while small-format devices like smartphones and tablets have driven overall industry growth for the last two years. As small-format devices dominate, Best Buy – as the Wall Street logic goes – should reduce square footage because smaller devices suggest less showroom space is necessary.
Beyond form-factor changes, the current (and temporary) decline in television sales and increase in sales of mobile-oriented devices have also had other impacts on consumer tech retailing. Importantly, more retailers are merchandising these mobile categories. While 5-6 retailers might offer traditional devices like televisions, mobile phones and tablets are being sold by these 5-6 traditional retailers and are additionally being sold by a host of “new” tech retailers. These new tech retailers include cellular carriers through their stores and websites. Manufacturers are also increasingly marketing devices directly to consumers. Apple iOS devices and Amazon with their suite of Kindle devices are only two examples of manufacturers going directly to consumers. In both of these cases, these companies have strong retailer ties. While Apple started as a manufacturer and has also transitioned into a retailer and Amazon went the other direction – the end-state is similar with the manufacturer of the underlying device having a strong and unique presence as a retailer. It is also commonly reported that margin differentials between devices like televisions and smartphones and tablets are pronounced.
The consumer tech landscape is ever-changing and at different times over the last 50 years, these changes have dictated a changing approach to consumer tech retailing. The current changes are surely pronounced, but it isn’t clear to me that less square footage will address the true underlying changes.
CEA’s HQ is in Crystal City– an area that is perhaps a square mile at most (here’s a map: http://g.co/maps/tdcfy). There are roughly six thousand residents and about 60,000 daily employees in Crystal City. Like any urban setting there are a plethora of restaurant choices. And yet today there were at least 5 food trucks in Crystal City – District Taco, Doug the Food Dude, Hot People Food, Big Cheese, and Lemongrass Truck.
Food trucks follow a pretty straight forward pattern, one that often relies on colorfully painted trucks and heavy use of social networking through platforms like Twitter and Facebook. With the explosion of options, new trucks entering the market have sough ever narrowing themes – a likely sign that the explosion has reached bubble-like proportions.
As the Google Insights for Search chart below suggests, the modern food truck phenomenon really began to take hold in 2010 (though food trucks date back well before then). The chart also shows food trucks are highly seasonal – with interest growing throughout the summer and peaking in September.
As we approach the prime months for food trucks, Google searches are on the rise, but remain below where they were last September. I believe September 2011 will mark the high mark for “food truck” web search and over the next several months we’ll see many more trucks exiting the business and a subsequent rise in this search.
In 1982 Lenny Skutnik became the first to be invited by a President to sit in the President’s box during the State of the Union address. This year the President invited Debbie Bosanek, Warren Buffett’s secretary, so he could make a political point. We take what was once reserved for recognizing true American spirit, an now make political postures. This is to me, the root of our great national’s problem.
Apple surprised to the upside (though it really shouldn’t be a surprise) with their quarter results today. Here is a quick overview of what they reported for fiscal 1Q12:
- Revenue: $46.3bn (+64% q/q +73% y/y) v. consensus of $38.9bn and company guidance of $37.0bn.
- Gross margin: 44.7% for the quarter (up 440 bps q/q) v. consensus of 40.8%.
- Operating margin: 37.4% (up 660 bps q/q) v. consensus of 32.5%.
- Earnings Per Share: $13.87 v. consensus of $10.08 and company guidance of $9.30.
- Mac sales: 5.20M (+6% q/q +26% y/y) v. consensus of 5.16M. This figure includes 1.48M (+16% q/q +21% y/y) desktops and 3.72M (+3% q/q +28% y/y) portables.
- iPhone sales: 37.04M (+117% q/q +128% y/y) v. consensus of 30.2M
- iPad sales: 15.4M(+39% q/q +110% y/y) v. consensus of 13.9M
- iPod sales: 15.4M (+133% q/q) v. consensus of 13.6M
There has already been much written on the results so I’ll just add my thoughts (in bold) to the commentary below:
Later today, Apple will report Q1 figures. We know much has changed in the tablet market over the last three months. Earlier this week, Pew Research Center’s Internet & American Life Project reported tablet and eReader ownership (unsurprisingly) surged during the 2011 holiday season.
This is consistent with what I expected (and subsequently reported) following Black Friday and the (unofficial) start of the holidays. Starting with Black Friday (but really through the entire holiday season) several things too place to help drive tablet sales. First, prices came down significantly. Prices for many of the “high-end” tablets were marked down significantly and lower priced tablets entered the market in calendar Q4. A declining price helps up-take. Secondly, both devices have been in the marketplace for 18+ months and are moving quickly into mass market appeal. We are moving into the fat part of the adoption curve. Finally, tablets were the loss-leader for many retailers on Black Friday. While the volume wasn’t high on a single-store basis, in aggregate there were a plethora of tablets (from a variety of OEMs) bought during the weekend across a myriad of retailers from Best Buy to Big Lots to Radio Shack to Staples, to ToysRUs. CEA estimates 14 percent of those who purchased tech over the weekend bought a tablet – up from six percent in 2010. eReaders also did well over the weekend with an estimated 15 percent of tech shoppers buying an eReader. This figure is up from 13 percent in 2010 and two percent during the 2009 Black Friday weekend.
According to Pew, both tablets and eReaders are now owned by about roughly 1/5 of the US population. More than a third of those living in households earning more than $75,000 (36%) now own a tablet computer and almost a third of those with college educations or higher (31%) own tablets.
I’ve written in the past how adoption always follows an s-shaped adoption curve. When it comes to digital data adoption we are in the fat (steep upward sloping) part of the adoption curve.
Reuters reported on Monday that Google is now streaming 4 billion videos a day. Moreover, 60 hours of video content is uploaded every minute -suggesting it would take 10 years to watch just want is uploaded in a single day. Sure there is duplication. Storage is “free” and whenever a resource is free, it tends to be wasted. Reuters reports YouTube is only making money on about 3 billion videos streamed weekly – would be interesting to know the make-up of those videos.
Perhaps most interesting will be what YouTube does with their Original Channels. Some of these media partners include the likes of Madonna and Jay-Z. YouTube has become the MTV of the digital decade.
It surprises me how many Internet properties overlook network theory. With storage prices at zero for the end user, aggregators win. Aggregators are the bookmaker of the digital decade.
Here is my presentation on some of the trends I was tracking headed into the 2012 International CES. I also highlight some of the product launches at CES. You can skip past the opening video which takes you through the week of CES in 3-4 minutes.
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