Ready, Fire, Aim! - Mihail's Public Blog

Monday, December 13, 2004

The second coming of George W. Bush

According to this Frank Rich column in the New York Times (registration require) the scary effects of President George W.'s re-election  have already started to surface even before he has started his second term as businesses start to censor what they believe the right wing will find "immoral":

Just three weeks after the election, Channel 13 killed a spot for the acclaimed movie "Kinsey," in which Liam Neeson stars as the pioneering Indiana University sex researcher who first let Americans know that nonmarital sex is a national pastime, that women have orgasms too and that masturbation and homosexuality do not lead to insanity. At first WNET said it had killed the spot because it was "too commercial and too provocative" - a tough case to make about a routine pseudo-ad interchangeable with all the other pseudo-ads that run on "commercial-free" PBS. That explanation quickly became inoperative anyway. The "Kinsey" distributor, Fox Searchlight, let the press see an e-mail from a National Public Broadcasting media manager stating that the real problem was "the content of this movie" and "controversial press re: groups speaking out against the movie/subject matter" that might bring "viewer complaints."

Maybe in the end Channel 13 got too many complaints about its own cowardice because by last week, in response to my inquiries, it had a new story: that e-mail was all a big mistake - an "unfortunate" miscommunication hatched by some poor unnamed flunky in marketing. This would be funny if it were not so serious - and if it were an anomaly. Yet even as the "Kinsey" spot was barred in New York, a public radio station in North Carolina, WUNC-FM, told an international women's rights organization based in Chapel Hill that it could not use the phrase "reproductive rights" in an on-air announcement. In Los Angeles, five commercial TV channels, fearing indecency penalties, refused to broadcast a public service spot created by Los Angeles county's own public health agency to counteract a rising tide of syphilis. Nationwide, the big three TV networks all banned an ad in which the United Church of Christ heralded the openness of its 6,000 congregations to gay couples.

GM discovers the corporate marketing blog

According to this New York Times story (registration required), corporate consumer marketing/advertising blogs are being seen increasingly...and while it makes sense that a brand like Nike would be using blogs to reach their market, even the less hip General Motors has gotten into the act:

Blogs are known for their brutal honesty, independence of spirit and genuine emotional conviction. None of these attributes play much of a role in corporate advertising, of course, but they are values that corporate advertisers strive to imitate -- and, where possible, co-opt.

...The G.M. blog, which Wiley describes as a cautious experiment, focuses on the 50th anniversary of the G.M. small-block V-8 engine -- a touchstone for hot-rod enthusiasts. Entries feature some legendary small-block-powered sports cars of the past and are sprinkled with posts from G.M. engineers touting horsepower and torque levels. Readers chime in with their own small-block stories and post questions on the future of small-block technology. It's clearly blogging by car geeks, for car geeks. But it turns out that geek to geek, informal and honest, is a pretty good model for the blogo ad.

From a marketing perspective, blogs make perfect sense. They are cheap to produce, immersive and interactive. It's easy to measure their readership and response rates. For small companies, blogs are a quick and dirty promotional tool that cuts out the middleman; for big companies, blogs are a tool of humanization -- an informal, chatty, down-to-earth voice amid the din of bland corporate-speak.

Beef tax

An amusing Jon Carroll column in the San Francisco Chronicle on the beef "tax":

Well, this is interesting. Cattle ranchers are suing the U.S. government because they don't like the institutional ads promoting beef sales. You know: "Beef: It's What for Dinner," which is a catchier slogan than it has any right to be.

It turns out that beef producers are forced to pay $1 per head of cattle to support the ad campaign. This is not a voluntary program; this is in essence a tax, and some of the ranchers don't like it much. It's not clear whether they like the campaign, but it is sure true they don't like being squeezed for the dollar.

The government gets $80 million per annum to pay for the ads, whose effectiveness is unclear. My proposal for a new beef slogan ("Cows: They're Not Mad Anymore") has so far not attracted the attention it deserves.

Wi-Fi cellphones

According to this WSJ story (subscription required), the cellphone companies may be in for a bumpy ride soon:

Last month, Japan's largest cellular carrier, NTT DoCoMo, started selling a cellphone that looks like any other. Most of the time, the phone, made by NEC, works like any other, too: When its owner is out and about, it uses standard cellular technology to transmit calls.

...Why does any of this matter? Each minute of wireless calling over Wi-Fi is a minute of calling not made over a cellular network. That has the potential to shake up the world of cellular calling.

Unlike a traditional cellphone call, which comes out of your bucket of paid minutes, calls over the Internet may not be counted at all. That means that if you were in your office -- or eventually your home, or Starbucks or any place that has a Wi-Fi connection -- you could make unlimited free calls (not counting the cost of the Internet service). That is particularly significant because roughly a third of all cellular calls actually are made from an office or home, according to a Yankee Group survey. DoCoMo's phone will work only if it is configured with a specific corporate Wi-Fi network; you can't just use it at Starbucks.

Cashing out your home

According to this San Francisco Chronicle story, with the average house having appreciated in value by 44% in the last five years (and homes in the East and West Coast major cities having appreicated up to 80% during the same time period), cashing out equity and lines of credit are increasing rapidly:

New research by mortgage giant Freddie Mac found that 60 percent of all refinanced mortgages the corporation purchased during the third quarter of 2004 involved cash-outs, where homeowners increased the size of their loans and pocketed the difference tax-free. That 60 percent figure was up from 42 percent during the second quarter and represents the highest rate since mid- 2002.

In hard-dollar terms, American homeowners converted $41 billion in real estate equity into spendable cash in the third quarter alone, up from $28.5 billion during the second quarter. For the year as a whole, Freddie Mac estimates that homeowners will cash out $118 billion of their home equity.

Saturday, December 11, 2004

Amazon.com launches Netflix-like UK service

According to this WSJ story (subscription required) Amazon.com has entered the growing DVD by mail rental business first in the UK and is expected to compete in the near future with the leader, Netflix, which will have 2.5M subscribers by the end of 2004:

The Seattle Internet retailer unveiled two plans under which consumers can order DVDs over the Internet and have them delivered to their homes through the mail: customers who pay £9.99 a month ($19.32) receive three videos at a time, up to six a month, while those who pay £7.99 ($15.45) receive two DVDs at a time, up to four a month. Like other companies with similar services, Amazon isn't charging late fees on videos, which consumers return by putting them into special envelopes and dropping them in the mail.

...Reed Hastings, chief executive of Netflix of Los Gatos, Calif., believes Amazon first entered the U.K. market because the entire country can be serviced effectively from one warehouse, which Amazon already operates on the outskirts of London. In the U.S., Netflix has a network of 30 warehouses near metropolitan areas so that it can provide overnight delivery of movies to the majority of its customers. Amazon has six warehouses in the U.S. for its existing retail business, many of them in rural areas.

Friday, December 10, 2004

Betting the house

The numbers are finally available on how Americans are cashing out the equity in their homes -- with encouragement from brokers -- to spend not on home improvements that increase their home value but other "patriotic" endeavors such as shopping and stock speculation. So much for the improving economy; in the heart of Silicon Valley and San Francisco we have dozens of friends without jobs for months if not years, or jobs that they are only taking because there's nothing else available. Many are living off the equity in their homes thru refinancing and low interest rates and our regional bubble which keeps property prices rising each quarter.

According to this WSJ story (subscription required), "Among the ways the NASD sees investors taking money out of their homes to speculate in securities are so-called 100% mortgages, interest-only mortgages and more traditional loans such as second mortgages. The NASD dubs such strategies "liquefying" home equity."

The so-called 100% mortgages aren't really what they are called because they still require the homeowner to pledge other assets such as their stock holdings...which is great as long as the stock market continues to do well or if the real estate bubble continues to increase a property's value but problematic if either the stock or the property falls in value.

In yesterday's warning, the NASD cited a recent Federal Reserve Board study that found homeowners are pulling money out of their property at greater rates than ever. From 2001 through the first half of 2002, 11% of total funds obtained from mortgage refinancings were used for stock-market and other financial investments. That is up from less than 2% during a previously studied period, through the first half of 1999.

The sums that people are pulling from their homes have jumped, too. In 2001 and 2002, the average amount used for investments was $24,000, up from "relatively small amounts" in the earlier period. The $24,000 plowed into investments topped the averages for nearly all other categories for which people used proceeds, including home improvement.

DNC goes small

Some great DNC stats from the 2004 Progress Report email that just showed up in my inbox. This is the basis for a great, grassroots effort in the next few elections, especially if we start to field candidates that stand up for the right things and connect with voters.

  • In 2000, the DNC only raised $35 million in small donations. Most of our resources -- over $150 million -- came in large donations. But in 2004, there was a remarkable turnaround. This year, the vast majority of our funding -- over $248 million -- came from average Americans donating what they could, while large donations actually went down to just $105 million -- less than a third of our total.
  • In the past four years, the DNC expanded its small donor base seven fold, from 400,000 in 2000 to 2.7 million in 2004.
  • The DNC invested $80 million in grassroots field organizing in 2004 -- 166 percent over 2000.
  • The DNC fielded more than 2000 organizers in battleground states, and conducted 530 organizing conventions across the country, training nearly 80,000 attendees.
  • We also mobilized 233,000 volunteers, knocking on 11 million doors, and making 38 million volunteer phone calls.

Canada gets it

According to this New York Times story (registration required), Canada has approved gay marriage while the US President George W. Bush continues to use the issue to divide and conquer. Already six Canadian provinces and one territory had ruled that traditional marriage was discriminatory; now all of Canada will treat all citizens equally while also allowing religious leaders to make their own decisions on who they'll marry -- there's an obvious difference between civil and religious marriage -- a policy that the US could do well to learn from. Note especially the comments by the Canadian Prime Minister.

Prime Minister Paul Martin, who is Roman Catholic, had said he was personally ambivalent about the issue. But after the Supreme Court decision, he expressed enthusiasm for an expansion of marriage rights because, "I do not believe you can have two classes of citizens." He promised to press ahead expeditiously with the legislation, which is likely to pass the House of Commons by a narrow margin.

"Several centuries ago, it would have been understood that marriage be available only to opposite-sex couples," the Supreme Court ruling noted. "The recognition of same-sex marriage in several Canadian jurisdictions as well as two European countries belies the assertion that the same is true today."

The court said that as a matter of religious freedom, priests and other religious officials would not be obliged to preside over same-sex marriages. It also ruled that the federal government had exclusive authority over the definition of marriage.

"I think this will engender a debate across the country," Mr. Martin told reporters. "We are a mature nation and can undertake the debate."

Thursday, December 9, 2004

King of retailing

According to this WSJ story (subscription required), "the appetite for luxury is seemingly insatiable today."

No one is enjoying this trend more than Neiman Marcus Group Inc., which posted earnings of $205 million for its fiscal year ended July 31, up 87% over the year before. Its stock has more than doubled in the past two years, and its average sales per square foot of $541 soar above all other department-store retailers. After a 14% increase in profits in its most recent quarter ended Oct. 30, the company is projecting another strong performance for the holidays.

...When Neiman Marcus's limited edition 2005 Maserati Quattroporte went on sale at noon Oct. 14, all 60 of the $125,000 customized sedans sold out in four minutes. Other extravagant gifts featured in the annual Neiman Marcus Christmas catalog are also selling at an unusually brisk pace, the company says, including hand-encrusted crystal versions of Mr. and Mrs. Potato Head, for $8,000 each, and a $20,000 customized suit of armor.

The rehabilitation of Martha Stewart

According to this WSJ story (subscription required), the rebabilitation of Martha Stewart is already beginning with two shows planned including one with reality-show whiz Mark Burnett:

Ms. Stewart is prohibited from conducting business from her West Virginia prison, although Mr. Burnett has visited her there, and plans to return next week. Still, Hollywood is rife with speculation. Options range from a splashy elimination-type show to a remodeling series a la "Extreme Makeover: Home Edition." Some schools of thought even have Ms. Stewart taking over "The Apprentice" from Mr. Trump. Ms. Stewart, whose image has always been fairly dignified, would have to decide how many show-biz dictates she is willing to endure.

...It worked for Donald Trump: Aside from generating millions for Mr. Trump's various businesses, "The Apprentice" shifted focus away from his often-ridiculed persona and restored him to prominence as a savvy, if still oddly coiffed, businessman. "This type of show would give her an opportunity to say, 'Boy, have I learned something' in front of a huge audience," says John Grace, president of Brand-Taxi, a Greenwich, Conn., brand consultant. "If it's done right, it will help her come back bigger than ever."

The post-DVD world: HD DVD vs Blu-ray

According to this WSJ story (subscription required), Disney has chosen Sony's new high definition post-DVD format called Blu-ray in contrast to the choice of three other movie houses who've picked Toshiba's HD DVD format.

Bob Chapek, president of Disney's Buena Vista Home Entertainment, said the studio's decision was based on its belief that Blu-ray will provide a superior experience for consumers. He thinks the interractivity, in particular, is better on Blu-ray, allowing commentary or game-playing overlaid onto the movie.

"Right now, in the world of DVD, the orbit of movie and the orbit of bonus feature never intersect," says Mr. Chapek. "Our goal is to dissolve the line ... letting the consumer get more deeply involved in the movie."

Disney's move sets the scene for a battle over consumers akin to the early 1980s battle between Sony Corp.'s Betamax and Victor Corp.'s VHS videocasette formats. VHS won, leaving Sony determined not to lose out this time around. But Mr. Chapek says a major factor was the fact that a lot of major consumer-electronics manufacturers have lined up with Blu-ray. "If one only looks at the alignment of studios, you're making a mistake understanding where the strength lies," he says. "You have to have hardware and software."

A new way to sell detergent

According to this WSJ story (subscription required), "the campaign for All [part of Unilever], now on television and in magazines, is as whimsical and low-key as most ads for laundry products are rational and hard-selling."

One commercial asks the question, "Why does the clean sock that falls on the laundry room floor attract all the dirt on the laundry room floor?" That is illustrated by four ugly animated characters, representing various types of filth, rising from the floor and dancing under a tiny mirrored disco ball. The party ends abruptly when All comes to the rescue, with the announcer saying: "Well, look on the bright side. All with stain lifters will get that dirt out - again."

The print ads take a similar approach to the commercials. One ad, showing a woman's pasta-eating accident, carries the headline, "White shirts put linguini in a dancin' mood." Another print ad, showing a party mishap, carries the headline, "The more wine you drink, the less likely you are to get it in your mouth." A third ad, showing a man holding up a tiny shirt, carries the headline, "Now your husband can get your clothes spring fresh while he shrinks them."

Saturday, September 25, 2004

"Sell Manhattan, buy Montana"

Interesting Wall Street Journal story (subscription required) which reflects what's happening around us in the Bay Area. Our contractor who was working in our house over the last few days told us that he has already sold his house in Sacramento for a tidy profit, and that his wife and he are moving to Bend, OR in January.

The real estate market is on fire in the central, popular parts of both coasts -- although there are signs that it is beginning to slow a little; we recently saw a ClockTower loft in SF that had been on the market for over 30 days -- giving people, as the WSJ puts it, an arbitrage opportunity to sell high and buy low. With intererest rates at their current lows, suddenly a million dollars for a fixer upper seems affordable for many who need to, or want to, be in the Bay Area.

So began a debate that is rumbling across many kitchen tables on the East and West Coasts: Is it time to take profits on the real-estate boom? The huge rise in prices in thriving cities on or near the coasts has created an arbitrage opportunity for people who have the flexibility to move: Sell Manhattan, buy Montana.

Over the past five years, raging real-estate markets in some coastal areas have more than doubled housing prices, while farther inland prices have risen more moderately. That has stretched the price gap between the middle of the country and the coasts far beyond the norm. The typical home price for the 10 American metropolitan areas with the highest housing prices has jumped to 230% of the national median from 155% five years ago, according to an analysis by Economy.com for The Wall Street Journal.

Thursday, September 23, 2004

Lookin' Good!

LG -- the Korean brand -- seems to be making significant inroads into the high-end market for kitchen and laundry room equipment. I had noticed their products recently because they look so cool.

I was reading earlier this year how people are spending more and more on high end appliances and knick knacks for their homes as they get used to paying more for the homes themselves. If you pay $1M+ for your southern San Jose four-bedroom, three-bath house, you may as well equip it equally well! According to this Wall Street Journal story (subscription required):

LG is aiming at wealthier consumers than GE and many other mainstream U.S. brands. LG appliances in the U.S. sell for an average of $800 to $1,000, according to data collected by market researcher Stevenson Co., which tracks such "white goods" sales. By contrast, GE, Whirlpool and Frigidaire sell most of their appliances for $400 to $600 on average. Sub-Zero refrigerators, on the other hand, sell for $1,600 to several thousand dollars each, and more than half of Viking's products also sell for more than $1,600.

LG's products are "positioned [at the] upper end and they are selling well," says Lisa Smith, general manager for appliances at Best Buy's headquarters in Richfield, Minn. "LG appeals to a customer base that's really interested in innovation, pure technology and great aesthetics." Ms. Smith says LG seems to be getting a boost from the company's image as a manufacturer of high-tech consumer electronics, from advanced cellphones to flat-screen TVs. LG sells some of its TV products under the Zenith brand, a longtime U.S. nameplate it now controls.

Thursday, August 5, 2004

As online orders grow, phone orders fall for 1-800-Flowers

Interesting how 1-800-Flowers is seeing a loss of orders via telephone as online orders increase...considering it is called "1-800" Flowers! :)  I haven't seen numbers for other companies but wonder if this is consistent across the board for catalog/mailorder companies. According to this Wall Street Journal story (subscription required):

Net income jumped to $30.4 million, or 45 cents a share, for the quarter that ended June 27, including a $19.5 million tax gain. That compares with net of $8.3 million, or 12 cents a share, a year earlier. Sales at the Westbury, N.Y., retailer rose 4.3% to $161.6 million from $154.8 million. Results were in line with the company's own forecasts.

...1-800-Flowers sells flowers, candy, gift baskets and other items mainly on the Internet and over the phone. Online revenue rose 11% to $93.1 million, while sales over the telephone dropped 6% to $58.4 million. The company anticipates the trend to continue: In its press release, 1-800-Flowers said it expects online sales to increase at a double-digit rate, with telephone sales remaining flat.

Tuesday, August 3, 2004

Yahoo! goes local

I still prefer the SBC (formerly Pacbell) Yellow Pages when it comes to finding an exhaustive list of businesses in a category. Google doesn't deliver. Citysearch doesn't deliver although does better than most when it comes to restaurants. And I somehow doubt that Yahoo! will be any better. According to this Wall Street Journal story (subscription required):

The Sunnyvale, Calif., company yesterday began testing the new local search engine, available at local.yahoo.com1, saying the site greatly improves the ability of users' to find directions, maps and other information related to everything from restaurants to movie theaters to day spas. The new local search engine lets users enter a location -- a ZIP Code, say -- and simple search words like "pizza" or "parking" to find all of the pizzerias and parking garages in a particular area. Yahoo also has begun letting users rate and review businesses in their area through its local search site. The search results Yahoo provides include advertisements, called "sponsored results," for local businesses.

Consumer spending plunges to 3-year low

Why is consumer spending that important? Why has George W. Bush been giving $2000 tax cuts to all of us -- and asking us to go spend rather than save that money, or worry about the terrorist threats that are going to come down on our heads in our office buildings (the latest alert) or public places -- so that we can contribute to consumer spending which is a whopping two-thirds of all economic activity. But that doesn't create jobs, does it? Especially if we're buying all these goods coming from China and Japan and India?

There seems to be a White House disconnect in logic. But then what else is new? According to this AP story in the New York Times (registration required):

The Commerce Department reported Tuesday that consumer spending dropped by a sharp 0.7 percent in June from the previous month. The retrenchment came after consumers splurged in May, ratcheting up spending by a strong 1 percent.

...Consumer spending accounts for roughly two-thirds of all economic activity in the United States. Thus it plays a key role in shaping an economic recovery.

Thursday, July 29, 2004

Amazon prods reviewers to own up to their opinion

This is a good step forward in differentiating and valuing an online opinion more when the author is willing to put his or her name to it. Hopefully, a system like this will spread to all online communities. According to this Wall Street Journal story (subscription required):

After years of letting Internet users anonymously savage or salute everything from books to toasters in online reviews, Amazon.com Inc. is encouraging its customers to put their names where their opinions are.

Earlier this month, the Web retailer quietly launched a new system, dubbed Real Names, that encourages users to append to their product reviews the name that appears on the credit card they have registered with Amazon. A logo saying "Real Name" appears beside such customer comments.

Thursday, July 15, 2004

Large LCD panel TVs to compete with plasmas

When we went shopping for our 42" plasma a year or two back we found that the largest LCD flat screen TV was only 30" at the Sony Style store in San Francisco. The Sony plasmas were new and improved and didn't have the burn-in problem of earlier plasma TVs where the pixels representing a stationary image would leave a permanent mark behind called ghosting. Supposedly the newer, better quality plasma TVs address this problem by moving the stationary pixels just enough to not have the burn in problem according to this PC World story.
 
Since then larger LCD TVs have arrived in stores in more variety and sizes. And we recently bought a smaller LCD flat panel TV for a second room. (Although we can't seem to get the colors to work on the HD selection. Seems to work fine when we switch to normal TV.) LCD TVs are especially great if you're connecting your PC to it as well and viewing text and graphics besides video -- the image can be brighter, crisper.
 
And according to the same PC World story, LCDs last longer than plasmas -- 50,000 hours vs 30,000 for today's plasma. So if you watch TV for five hours each day (or at least leave it on that long with CNN in the background, for example), then your plasma TV may last only for 6000 days or 16-1/2 years. OK, so that's not really an issue here! :) And supposedly LCDs look better during the day while plasmas look better at night.
 
This new $2B venture between Samsung and Sony should give larger size (42" and above) LCD TVs a big boost! According to a Wall Street Journal story today (subscription required):
Caught behind in flat-screen TV technology, Sony last October turned to Samsung for help, agreeing to pay half the cost of a $2 billion factory Samsung was already building near the small town of Asan, about 60 miles south of Seoul. The companies formed a 50-50 joint venture, dubbed S-LCD Corp., that will share the factory's output of 40- and 46-inch liquid crystal display, or LCD, panels for use in flat-screen TVs.
 
...Indeed, the venture could play an important role in the future of both Samsung and Sony as TV manufacturing undergoes a historic transition. LCD-TVs [and plasma?] are likely to become the most popular among a new breed of TV sets that are slimmer and better-looking than today's bulky tube models. LCD-TVs account for just under 5% of annual world-wide TV sales today, but that's expected to triple by 2008. In developed countries, they may constitute the majority of TV sales within a decade.

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