As the holiday shopping season focuses attention on retail, persistent rumors have it that Amazon is planning to invade the brick and mortar space.
Is it going to happen? I think it’s very likely. As local pols move aggressively to tax Amazon’s online sales, the real driver is lobbying from big box retail as much as from the need for revenue. If Bezos and company are to be force to collect sales tax, why not compete with the big box players on their own turf? Then there’s #1 book competitor, Barnes and Noble that has surprised nay sayers by leveraging it’s storefronts to better compete with Amazon in the virtual space. The over consolidation of physical retail has left a shortage of shelf space for competing products. Apple and more recently, Microsoft began operating their own stores to combat this. With Amazon’s growth to major player status in computers and electronics, many more sales of higher priced items will be made if consumers can touch and feel before making a decision.
What would an Amazon store look like? What would it stock?No way of knowing for now. One thing for certain is that physical stores could bring more competition back to the brick and mortar universe. IF that happens, everyone except maybe WalMart wins.
I have been scratching my head as to why NetFlix did their corporate split between the streaming side and the DVD to the home side of things. It just did not seem to make a lot of sense and brought no advantages to the NetFlix customer. Then I saw this –
Those of us in the U.S. already know how powerful the tiny red kiosks really are. Redbox and Netflix are directly responsible for the demise of offline movie rental giant Blockbuster. Will Redbox’s new streaming plan now steal significant marketshare from Netflix?
At just under four bucks, it’s definitely a threat.
The proposed package would run US$3.95 monthly, and would provide unlimited video streaming, along with customer coupon codes for four free DVD rentals at any Redbox kiosk.
The cheapest plan Netflix currently offers is $8.95 and it doesn’t include streaming, since Netflix split its services into Qwikster (for mail-in DVDs) and the original Netflix brand (for streaming).
No word yet on what hardware the Redbox streaming service will entail, but we’ll definitely be keeping an eye on it.
Still confused? Look if I was NetFlix management and got wind of a competing streaming service that would be a third the price of my cheapest dual service offering I would do something too. What would I do? Split it up. That way regardless of how the dollar cost impacts occur on the streaming side I can still protect my margins on the physical disk side of things. Very logical. But only if you don’t think that the little RedBox kiosk is not a competitor to your DVD to the mailbox service.
That is where NetFlix is making a mistake. The little RedBox kiosk is a direct competitor. Fact a very fast direct competitor. I can dip into the little red kiosk as often as I want. Not so much on the NetFlix side. Especially if your favorites are still sitting in queue for weeks on end.
At least there is some logic to the decision. We’ll see what the marketplace says.
[Update and bump] Well it appears that the NetFlix folks have decided that the split was not a good idea after all. So it looks like we will have a head to head competition between NetFlix and RedBox.
So, I wonder how NetFlix operates if the Post Office does close it’s doors?
Thanks to KH for the tip.
Karl Denninger makes the case that Amazon and Apple are toast in the long run. You can read the whole thing here. Some notable observations from the post follow –
Now on to Apple. There was a report out Monday that the firm had cut supplier deliveries by 25% out of Asia. There was a mad analyst scramble during the day to try to refute the damage that was rapidly accumulating in the stock, which was mostly successful. In my view, this was a fool’s errand and you were a nut if you followed people into the stock on that “dip.”
Apple gets a lot of its sales in Europe. But Europe is a train wreck economically. To believe in the forward story and that the production cut is not “real” you have to believe Europe will avoid a Depression. Given what’s going on over there, such a belief is an act of pure insanity.
Oh sure, they might not get the worst of it right now, but this is a forward projection, not a call for a crash in the morning. You also have to believe that the United States will not suffer the knock-on effects and that sales here won’t get hurt. And finally, you have to dismiss the fact that HP (HPQ) effectively destroyed pricing power for tablets with their “blowout” of the Touchpad.
The latter may well be a stake through the heart. HP’s “blowout” put the $99 price point in the mind of consumers and that is not going to go away. This sort of “ratchet” mechanism has a well-documented history in America, and once it takes hold it is almost impossible to get rid of. There are already signs that this pricing pressure is eroding the edges of everyone else’s tablets, with the first to succumb being RIM (RIMM)’s “Playbook.” This will reach Apple and margin collapse is a well-documented phenomenon that has a habit of trashing stock valuations.
First of all you might not have been a `nut` to have bought on the dip. Even if Xmas is flat, tablets are going to be the hot thing in tech this year. I suspect that Apple will sell all it has its hands on. So long as you intend to sell out near the end of Apple’s quarterly results one might make a small profit. Not a small feat in a down market.
But long term I think Denninger has it right. Jobs, the pirate that he is, had the pulse of what was hot as human factors and customer feel. Its been a signature mark of Apple and its CEO. But Jobs is bowing out now. His style of management only comes around about every 20 years or so. Not only that his imprint on Apple is probably its own curse. It been more than one company that lacking its signature captain has been cast adrift and floundered on the shoals of NoVision.
That ultimately will be Apples’ fate.
Amazon will also blow up; it shares Netflix’s former screwball P/E (currently 101).
“These people f—ed me over,” Yahoo’s just-deposed-CEO Carol Bartz told Fortune’s Patricia Sellers.
According to Bartz, Yahoo chairman Roy Bostock fired her by reading a statement prepared by a lawyer over the telephone. “Roy, I think that’s a script,” Bartz said. “Why don’t you have the balls to tell me yourself?”
Bartz places the blame for Yahoo’s troubles squarely on Bostock and the board, arguing that their insecurity created expectations that couldn’t be fulfilled: “They want revenue growth, even though they were told that we would not have revenue growth until 2012.”
“The board was so spooked by being cast as the worst board in the country,” Bartz added. “Now they’re trying to show that they’re not the doofuses that they are.”
What launches this inherent brand of open disclosure from the boardroom set? Well in Bartz’s case it was because they fired her over the phone! Cry me a river.
I have news for Bartz, Corps have been doing phone in reductions in force for over a decade or more. The fact that this technique has finally reached the `C` set should not come as a surprise. Fact my question to Bartz would be — how many have YOU done this to who are your immediate staff?
Welcome to the cube farm baby!
Is Mobility a good buy? Maybe. They do have the plant, equipment and personnel make Google a tier one device mfr. But I would point out that Apple is enjoying tier one results without the tier one expenditures in capital. So the M&A mgr might not look at that as the best deal in town. On that basis alone. So what might be worth the money spent? My guess — patents. Google needs a patent pool to defend Android. This is their way to do it. The manufacturing was a side benefit.
Could Google have done better? I think they could. Remember Google was a bidder in the FCC 700mhz `C` auction. Verizon who was the winner placed a winning bid of $4.7Bn. So lets say Google had won with $5Bn. Would they need patent protection for Android? Sure. But they would have had the network rights to trade with the right partners. One needs to think like Cprl. Klinger to understand that with the network in hand, Google could have traded access both with IP partners, manufacturing and design. Network is one of the few IT resources that are fungible unlike other IT tech.
Bottom line Google could have achieved the same aims at a lower price had they won the 700mhz auction.
Borders, which employs about 10,700 people, scrapped a bankruptcy-court auction scheduled for Tuesday amid the dearth of bids. It said it would ask a judge Thursday to approve a sale to liquidators led by Hilco Merchant Resources and Gordon Brothers Group.
The company said liquidation of its remaining 399 stores could start as soon as Friday, and it is expected to go out of business for good by the end of September.
Borders filed for bankruptcy-court protection in February. It has since continued to bleed cash and has had trouble persuading publishers to ship merchandise to it on normal terms that allowed the chain to pay bills later, instead of right away.
But loss of another major book retailer should be of some concern for the big publishers. They were part of the control flow of book publishing. When you had a half dozen big retailers that sold 80% of the books it was quite easy to campaign your wares through that select channel and forget the rest. But that is slowly not becoming the case. Over the long haul it looks like the flow will return to the savvy independent bookseller who is in tune with his regional audience, caters to those issues, knows how to cross market and stay competitive against the big boys. Or at least those that are left.