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

Political analysts point to Senator Bob Dole's plug for his website in his closing statement in the first presidential debate in 1996 as that pivotal moment t hat made the Internet essential in politics, according to this New York Times story (registration required):

Perhaps most important for the candidates, the Internet allows them to disseminate information that is unfiltered by the media or other sources.

"Everything I release to the media is subject to editing or is condensed," said Dirk Anderson (www.dirk2002.com ), a Republican candidate for sheriff in Lewis and Clark County in Montana. "I can't get anything in the paper the way I want unless I buy an ad. But I can put anything I want on the Web."

But that doesn't necessarily mean many people will see it. In an effort to help voters find their sites, most local candidates plaster their Web address on yard signs, brochures and everything they send out in the mail. Ms. Valletutti puts hers on bumper stickers. Ron Pritchard, a Republican running for county commissioner in Brevard County, features www.ronpritchard.com more prominently than his phone number on most of his campaign handouts.

Video games are being forced to evolve as the average player's age has increased to 28 years, and the time it takes to play a game to completion is now as much as 20-40 hours due to the rise of online gaming, according to this New York Times story (registration required):

For arcade games - much like pinball games before them - designers knew that good timing was the way to keep young customers playing. "You wanted to have something that the player can feel is successful in the first three minutes of the game, and something suspenseful a few minutes after that," Mr. Jenkins said. "Arcade games are five-minute games, and the players have to be in the middle of something when the machine kicks down so that they'll put in another quarter."

..."You work in cycles of time,'' said Steve Gray, director of game development at Electronic Arts. "The MTV generation has a three-to-five minute cycle that is important. There's 30 minutes for the TV cycle, and 90 minutes is the film. In games, you don't want three to five minutes to go by without giving them something."

...Traditionally, the best way to get a young player to keep playing was simply the score. But this kind of motivation can become stale quickly with more experienced players, said Bob Stevenson, one of the creators of the game Giants, a traditional action shooter that uses unconventional humor as a payoff system. "Scores are the most fundamental motivator," he said. "Our reward system is comedy within the game. It makes you laugh and motivates you to move forward in the narrative."

...But to keep their audiences engaged over the long haul, games can't just deliver satisfying payoffs: game designers also have to defeat their customers in interesting ways. "You need interesting, diverse ways of failure," Mr. Wright said. "Gamers have to believe that the next time they won't fail, because they now know about the monster hiding behind the door, or that you need to feed your Sim before it dies. You have this physiological urge to go and finish the problem: Your brain knows what to do now, and it wants to go back.."

Amazon's revenue soared and net loss dropped in the latest quarter according to this News.com story:

The e-tail giant posted a net loss of $35 million, or 9 cents per share, on sales of $851 million. In the year-ago period, the company lost $170 million, or 46 cents per share, on $639 million in sales.

...Amazon was able to improve its results based on its pricing strategy, Jeff Bezos, the company's chief executive officer, said in a statement.

"We’ve lowered prices five times over the last 15 months, and simply put, it’s working," he said.

...Amazon saw its shipping revenue stagnate and losses mount as a result of the free-shipping offer, said Mark Peek, the company's chief accounting officer. The e-tailer's shipping services lost $10 million on $73 million in revenue in the quarter, compared with a loss of $2 million on $74 million in revenue in the year-ago period.

Forced by threat of legal action, Google has been deleting sites that violate local laws (for example anti-Semitic or pro-Nazi in Germany) or are brought to their attention, according to this News.com story:

The Harvard report, prepared by law student Ben Edelman and assistant professor Jonathan Zittrain, and scheduled to be released Thursday, is the result of automated testing of Google's massive 2.5 billion-page index and a comparison of the results returned by different foreign-language versions. The duo found 113 excluded sites, most with racial overtones.

...Google was criticized in March for bowing to a demand from the Church of Scientology to delete critical sites from its index. In a response that won praise, Google replied by pledging to report future legal threats to the ChillingEffects.org site run by law school clinics.

...Edelman, of Harvard's Berkman Center, suggests that Google find a way to alert users that information is missing from their search results.

"If Google is prohibited from linking to Stormfront, they could include a listing but no link," Edelman said. "And if they can't even include a listing for Stormfront, they could at least report the fact that they've hidden results from the user. The core idea here is that there's no need to be secretive."

As new homes are becoming too expensive to buy in cities like San Francisco and New York, many people are electing to do renovations to their current home instead, according to this New York Times story (registration required). Of course, none of this comes cheap: a major kitchen renovation can cost an average of $40,000.

Kitchens and bathrooms, in particular, are becoming more high-tech. Some new appliances have several functions, like the refrigerated range, which chills food at 40 degrees and can be programmed to warm it up or start cooking at a certain time. Some sinks can convert into dishwashers. And in bathrooms, showers are often now separate from the tub and might include steam or fiber optics that change the color of the water to suit the bather's mood.

...The National Association of the Remodeling Industry predicts that Americans will spend $163 billion on renovations this year, up 3.5 percent from 2001 and 8.7 percent from 2000. Much of the money is being spent by people who have moved recently. (This year alone, sales of existing homes are expected to reach 5.4 million units, breaking last year's record of 5.3 million.)

Bill Gates joined Disney's Michael Eisner at the launch of MSN 8, declaring that "We understand that we aren't a media company," according to this News.com story:

During his introduction, Gates said that Microsoft was taking a different approach with MSN 8 than it took with earlier versions. Rather than making online content a priority, Microsoft focused on improving the online access client. This approach is important because the boundary between "what you do online and on the PC doesn't exist," Gates said.

...In a Wednesday interview, Yusuf Mehdi, the corporate vice president overseeing Microsoft's MSN division, estimated that ISPs like AOL and MSN take in about $10 profit per customer, before accounting for cost of acquisition and related costs.

MSN is betting big on broadband; AOL, however, loses profit every time one of its customers converts from dial-up to broadband, say analysts.

"If (they) move to broadband--(to) anyone but Time Warner--all that profit is gone," Mehdi said. "We're all in the same boat, that the move to broadband is a challenge."

The RIAA, having put Napster out of business, is now targeting corporations in its bid to end piracy of music and films of P2P services, according to this News.com story:

The Recording Industry Association of America (RIAA), the Motion Picture Association of America (MPAA) and songwriters' associations have drafted a letter expected to be sent Friday to the Fortune 1000 companies, cautioning executives that employees' song- or movie-swapping could put them at legal risk.

"It appears that many corporate network users are taking advantage of fast Internet connections at work by publicly uploading and downloading infringing files on P2P (peer to peer) services, and also distributing and storing such files on corporate intranets," the groups wrote. "The use of your digital network to pirate music, movies, and other copyrighted works both interferes with the business purposes your network was built to serve and subjects your employees and your company to significant legal liability."

Apple is expected to go further mainstream by selling its MP3-playing iPods thru Target according to this News.com story:

Wolf estimated that Apple might be able to sell as many as half a million of the devices this quarter, assuming that the company can grab about 15 percent of the world market for portable music players and that sales reach the 4 million units that some market researchers are projecting.

...In September, Apple announced that electronics retailer Best Buy would carry the iPod. Adding Target is key for Apple, Wolf said, because the retail chain has more than twice as many locations as Best Buy.

"It's a hot chain," Wolf said of the discount retailer.

According to this News.com story, "Tech spending could accelerate toward the middle of next year, according to a poll of chief information officers, a trend that could benefit Microsoft and a few select companies."

Fifty-one percent of the respondents in the poll conducted by Merrill Lynch said that information technology demand should pick up in the second or third quarter of 2003. Seventy-five North American and 25 European CIOs participated in the poll.

"A number of users pointed to aging equipment and a backlog of user requests for reasons why spending will improve," the study stated.

Barry Diller's media company USA Interactive reported a third-quarter loss but beat Wall Street expectations due to a 42 percent surge in revenues, according to this New York Times story (registration required):

For the three months ending Sept. 30, the media company reported net loss of $36.6 million, or 8 cents per share, compared with net income of 450.9 million, or 59 cents per share in the third quarter of 2001.

The company said that third quarter revenues increased 83 percent at Hotels.com and 110 percent at Expedia.com. Both Web sites provide online booking for travel services. Revenues at Match.com, an online matchmaking service, surged 168 percent.

For the nine months ending Sept. 30, revenues were $3.28 billion, compared with $2.52 billion in the comparable period of 2001. Net income was 1.83 billion, or $3.96 per share, compared with $524.7 million, or 69 cents a share.

There's a ban on senators from updating their websites if they're running for re-election, according to this New York Times story (registration required) because the Senate had determined that websites provide incumbents with a taxpayer-subsidized advantage during an election year:

Under Senate rules intended to prevent members from campaigning at government sites, the 30 senators seeking re-election next month cannot update their sites during the home stretch of the campaign. There is no such rule for House members.

Some senators and political groups say the rule should be abolished, or at least altered, to reflect the way the Internet has penetrated society. In addition to the Johnson-Thune race in South Dakota, current races in Louisiana, Iowa and Georgia pit a House member against an incumbent senator.

"This is a quirk in the rules that is really unfair to Senate incumbents," said Bob Martin, the communication director for Senator Johnson. "Web sites have become such an effective communication tool for constituents that it is like being thrown back a decade." Members of Congress are barred from sending out mass mailings in the 60 days before an election. When Congress enacted its Internet rules in 1996, the House decided that information provided on the Web was different from unsolicited mail sent to a voter's home and would be permitted.

From the Wall Street Journal Digits column (subscription required):

Tired of waiting in lines for that morning latte? Coffee drinkers in Seattle and Denver can avoid the wait by dialing ahead to certain Starbucks coffee shops, wired with technology from Ontain Corp., a Bellevue, Wash., wireless company.

The coffee company began testing the service in 10 Seattle shops in August 2001 and expanded this year to 60 shops in Denver. Clogged commuters can call ahead by cellphone and, with the touch of a key, place an order that will be ready and waiting.

Users register online, punching in credit-card information, store selection and a drink or pastry of choice. The call is linked to the cash register, which spits out a sticker of the order tagged with the user's ID. The service costs 25 cents more.

Interesting. Expedia Inc. posted a sharp increase in third-quarter net income as vacation bookings and revenue more than doubled at this popular travel site, according to this Wall Street Journal story (subscription required). Most importantly, since many users like myself just use sites like Expedia and Travelocity to check prices, not purchase reservations:

The company also reported that "conversion," or the average monthly percentage of visitors who purchased travel on Expedia.com, increased to 6.7% from 5.5% in the year-earlier period.

GM's Onstar, which has more than 2 million subscribers, has a renewal rate of 56% after the first year. According to this Wall Street Journal story (subscription required) that is just short of the company's target of 60%.

Two years ago, GM began a big push to expand Onstar, which combines a built-in cellular phone with global-positioning equipment to connect cars to operators at a service center who can provide emergency assistance, travel information and other services. Onstar also offers features like remote door unlocking and tracking of stolen cars, as well as voice-operated phone service and Internet access. Onstar charges $16.95 a month for basic emergency service, which accounts for about 80% of its subscribers, with packages including navigation assistance and concierge services costing $34.95 and $69.95 a month.

GM has included Onstar hardware and a one-year subscription to the basic service in popular option packages on many of its models, and offers it as a standalone option on some vehicles at a cost of $695. The service also is available on some vehicles from rivals, including Toyota Motor Corp. and Honda Motor Co. Volkswagen AG will be rolling it out across many of its Volkswagen and Audi vehicles in the next year, Butler said.

Wal-Mart and Blockbuster's forays into the DVD rental market popularized by NetFlix, as revealed a few months ago, are detailed in this Wall Street Journal story (subscription required). This shift and viewing and rental behaviour means that some people are even beginning to cancel their premium cable channels such as HBO in favor of a subscription-based DVD service which delivers not only the latest movies but also popular HBO and Showtime dramas.

The moves come as the $14 billion home rental market is adjusting to the explosive growth of DVDs and a sharp decline in videotape rentals. For the first nine months of this year, videotape rentals fell 13.5% compared with the same period last year, according to Alexander & Associates, a New York research firm. DVD rentals jumped 105%, in contrast, although the dollar value of the DVD market is still only about half the size of the videotape market, Alexander estimates.

One target of the new services: people who have backed off movie rentals because they hate paying late fees -- or "extended-viewing" fees, in Blockbuster-speak. It's also a way of generating consistent revenues, especially since many customers have the fee billed regularly to their credit cards. That means Netflix or Blockbuster is getting your $20 a month even if you're on vacation or working too hard to take in movies.

The biggest challenge facing the new services may simply be persuading consumers to rethink the way they pay for movie rentals. But it isn't that much of a leap for people who are increasingly accustomed to paying monthly fees for entertainment offerings, such as HBO, satellite radio, Internet access, music-download services on the Web and magazines.

...Blockbuster is skeptical about the online services, no doubt in part because the company wants customers to keep visiting its 5,000 stores. They argue that people usually rent on impulse, often on the way home from work or shopping. But they acknowledge that late fees have soured some people on renting and they hope the new services will lure those customers back. In the past, late fees have been a big source of revenue for Blockbuster. While the company no longer discloses the figure, in 1999 late fees accounted for 15.5% of total revenues, or $692.6 million.

Blockbuster clearly is not starting the program to save customers money. In the current test markets, Blockbuster Chairman John Antioco says, "the average customer spending is up after they join the program." After all, while you might rent six movies one month, there's always going to be those months you're on vacation.

...Netflix has signed up 742,000 customers, four years since it launched. Blockbuster has signed up more than 200,000 customers at the 500 stores that had the program before last week. Blockbuster is testing in New York area, Seattle, Phoenix, and Houston, and last week it added Salt Lake City.

The growing trend to bring online connectivity to passengers on airlines, led by European airlines as usual since US airlines have delayed plans to use Connexion's services in the face of economic woes, according to this Wall Street Jouranl story (subscription required):

After years of ordering passengers to go offline upon takeoff, a number of airlines are set to make it possible to e-mail or even surf the Internet while mile-high. Early next year, Lufthansa will become the first airline to offer high-speed Internet access to passengers. British Airways will follow suit soon after. Both carriers will be using Connexion, a major new Boeing initiative. It should also help the beleaguered airlines boost revenues, since they typically get a cut from such services.

Meanwhile, the old GTE Airfones that now often sit ignored in the seat backs on airlines such as United and Delta are getting substantial upgrades. Last month, Verizon, which now owns GTE, started rolling out JetConnect [flat fee of $5.95] on carriers including Continental Airlines. The service allows passengers to plug their laptops into the Airfones and play games or send instant messages. Airfone plans to eventually add high-speed e-mail to the mix.

...Cellphone use aloft isn't uncommon either. Last Friday, in fact, an afternoon flight on Southwest Airlines from Houston to Dallas was forced to abort its landing twice and return to Houston when the navigation equipment stopped functioning properly. On a hunch, the pilot asked the flight attendants to see if anyone had been using cellphones -- and found two.

...There's been little research to back up the airlines' precautionary safety measures. A government study at the University of Oklahoma (conducted by a group that's partly funded by the wireless industry) looked into whether cellphones can interfere with some plane systems, and concluded they don't. However, separate research by U.K. regulators tested two parked planes and found that cellphones might cause interference.

John Sheehan chaired a 1996 study that examined gadgets such as laptops and game players on planes -- but not cellphones or e-mail devices. While his study found little likelihood that the devices will harm a plane, he has no doubt that it could happen. Should airlines allow people to use BlackBerries in the air? "Absolutely not," he says.

Absolut is facing problems as its brand and vodka lose favor with younger drinkers and the hip bars and hotels that made it successful in the first place. While this is natural as smaller, more nimble and hip companies take Absolut's own receipe for success and carve out niche markets (such as Finlandia becoming the vodka of choice in the latest James Bond flick),  I think its TBWA/Chiat/Day advertising campaign is pretty darn dated and boring at this point no matter how relevant they may make each new ad to current pop culture. And according to this Wall Street Journal story (subscription required) its joint distribution venture with the distributor of Jim Beam doesn't help it portray a more exclusive image either.

Absolut, one of the most profitable spirit brands in the world, nearly reinvented liquor advertising with its witty campaigns featuring such items as watch works, cheese, baseball bats, yellow cabs and an electronic organizer in the shape of an Absolut bottle. When the campaign started in 1980, Absolut had only 0.1% of the U.S. vodka market and the U.S. imported only about 740,000 cases of vodka a year, according to Impact Databank. By last year, Absolut's market share was 11.7%, and the imported vodka market had risen to about 39 million cases, a record.

But at a time when vodka is the hottest category in the spirits business, Absolut's market share is declining. Its 11.7% share is down, for the first time, from a high of 12.2% in 2000.

The company, owned by Sweden's V&S Vin & Sprit AB, finds itself chasing chic super-premium imports that are leveraging two of Absolut's marketing staples -- elegant bottles and savvy advertising -- into more space on the bar shelf. Grey Goose's market share doubled last year to 1.5% from 0.7%, while the market share of Poland's Belvedere jumped to 0.8% from 0.4%. Both are priced north of $25 for a 750 milliliter bottle, compared with less than $18 for Absolut.

A Wall Street Journal story (subscription required) pointing out AOL Time Warner's continuing lack of knowledge about how big a problem it really has with AOL's revenue classification. However, it also puts the problem in perspective since this is a small number compared to its last quarter revenue of $1.4 billion, for instance. That's always made me wonder why investors were freaking out so much by just this issue -- fine, if they wanted to be worried about the softness in the advertising market or AOL's slowing rate of new subscribers. But this?

Dot-com cockroaches have a way of multiplying in corporate offices and AOL Time Warner is finding it now has four times the infestation.

Did AOL Time Warner say that improperly booked revenue from its America Online unit was $49 million? Actually, it's $190 million of revenue restatements, according to a company announcement Wednesday after the market closed. Doesn't give you much confidence that Time Warner has a handle on problems at AOL.

Jonathan Clements in this Wall Street Journal story (subscription required) on whether the recent rally indicates anything for investors:

This month's explosive rally changed a lot of minds on Wall Street, and there's a growing sense that the long bear market may finally be over.

But is it? My market-timing instincts are as good as any on Wall Street. In other words, like everybody else, I haven't a clue what will happen next. My hunch is that stocks have bottomed. But I had the same hunch in April 2001, September 2001 and July 2002.

Still, I consider the recent market rally to be a wake-up call for investors. Even if share prices slump once again, this grueling bear market won't drag on forever. With that in mind, it is time to prepare your portfolio for the bull market that will inevitably follow.