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

Are today's media conglomerates just too big to chart the rocky waters of the postdotcom world? That's the question asked in this Wall Street Journal story (subscription required). The article gives the example of recent top ousters of execs at Vivendi, Bertelsmann and AOL Time Warner as proof.

Today's media business was built on the idea that all kinds of "content creators" -- movie studios, record labels, theme parks -- ought to be housed within the same corporate organization. Then, those same companies began acquiring the channels through which they distribute their entertainment to the public: TV networks, cable systems and Internet service providers.

The result is a sprawling mix of businesses that each have their own set of problems -- many of which are now coming to a head at once. There is continuing fallout from the attempt to marry entertainment and technology interests, especially in the failed AOL-Time Warner deal. The combination is rife with conflicted interests, such as a cable operator and cable programmers residing within the same company, when they are normally sworn enemies engaged in brutal negotiations.

GM, which invested in XM's most recent round of financing, has continued to offer satellite radio in an increasing number of brands of cars since first offering it in 2001 according to this Wall Street Journal story (subscription required). XM added 145,000 subscribers in the 4th Quarter, a 72% increase from the 3rd Quarter, bringing XM's total subscriber base to over 360,000. XM expects to end 2003 with more than one million subscribers.

In a news release, the Detroit auto maker said XM will be available in 44 of its 57 models at the start of the 2004 model year. The service will cost about $9.99 a month, and customers that have GMAC financing will have the option of including the XM subscription in their monthly car payment.

..."XM's accelerating subscriber growth has been fueled by 'the second launch of XM' in new vehicles from General Motors and other auto makers," said XM President and Chief Executive Hugh Panero, "and by our 'third launch' into the home and portable markets with our next-generation SKYFi receivers, including XM's first portable radio."

After all the stories about the death of the banner ad it seems pop-up ads have twice the clickthrough rate...but one analyst says that may be only because many Internet users don't know how to close those extra windows yet according to this ZDNet story. And Google and the gang continue to prove the effectiveness of targeted text-based ads.

According to a study conducted by GartnerG2, 78 percent of respondents claimed they found pop-up ads "very annoying." In contrast, only 49 percent of participants applied the same rating to banner ads.

Yet pop-ups had click-through rates almost twice as high as those of banner ads, meaning they're probably going to stick around a while. Indeed, Nielsen/NetRatings' online-advertising rating, AdRelevance, found that pop-up impressions jumped from 1.2 billion to 4.9 billion between January 2002 and September 2002.

Although he had vowed to keep fighting, this weekend Steve Case decided to stop the continuing distraction of his remaining chairman according to this New York Times story (registration required):

Stephen M. Case, the former chief executive of America Online who engineered its acquisition of Time Warner, resigned last night as chairman of the combined company, AOL Time Warner, bowing to shareholder anger over the dismal results of the merger. He will remain as a board member.

According to this AP story in the Wall Street Journal (subscription required):

In a novel use of information warfare, the Pentagon sent e-mail messages to Iraqi generals to encourage dissent and defections and to warn against carrying out any order from President Saddam Hussein to use chemical or germ weapons against U.S. or allied forces, an official said Friday.

The official said it was the first time this technique had been used. Speaking on condition of anonymity, the official said it was part of a broader campaign by the Pentagon and other U.S. agencies to weaken the Iraqi military's loyalty to Mr. Hussein and to dissuade the use of chemical or biological weapons.

I find all kinds of stats really interesting...so here's one on the cola market according to this Wall Street Journal story on a company that makes sodas competing with Coke and Pepsi. All I have to say is that I'll always drink Coke...and if I can find it, Fanta Orange! :)

[Cott Corp.] the once-moribund company today is quietly giving its big brand-name rivals, Coca-Cola Co. and PepsiCo Inc., a run for their money by churning out new, copycat products in jazzy packages at competitive prices. From 1999 through 2001, Cott's share of the U.S. carbonated soft-drink market climbed 0.7 percentage point to 3.8%, while Coke lost ground during the same period, falling to 43.7% of the market from 44.1%, and Pepsi barely inched up to 31.6% from 31.4%, according to a closely watched survey by industry newsletter Beverage Digest.

According to a Wall Street Journal story (subscription required) there's a cool new name and branding campaign by Intel for its combo Wi-Fi chip that I've been hearing about for the last year from a friend who is working on marketing it. However, some Intel customers and partners are worried about Intel's decision to push all components as a bundle.

Centrino is Intel's first brand to stand for a combination of products. The bundle is based on a new microprocessor that is designed to consume little electrical current and offer extended battery life. The package also includes Intel chip sets as well as several chips for wireless communications, which typically are contained in a small card inserted into a laptop computer.

...Intel officials stressed that computer makers still have the choice of buying each of the products individually and substituting competing components for any of them. They argued that promoting the products in a bundle is justified by the new capabilities Intel is providing, as well as by testing that the company will do to make sure all of its chips work particularly well together.

Even though online holiday sales increased 28% to $13.8 billion from $10.8 billion a year ago according to ComScore Networks estimates, some customers are beginning to sour on delayed delivery of Christmas gifts even from reliable etailers like Amazon according to this Wall Street Journal story (subscription required):

Despite strong overall sales growth for online retailers, it appears customer opinions about Web merchants slipped this Christmas. According to ForeSee Results Inc., a research firm in Ann Arbor, Mich., Internet retailers scored 69 out of a possible 100 on the firm's customer satisfaction index -- the equivalent of a "C."

Last holiday, Internet retailers scored a 77 with shoppers in a survey by the University of Michigan, which uses the same research methods as ForeSee. According to ForeSee's Results survey, a small but significant minority of customers had a bad time on the Net this holiday. While 59% said they were highly satisfied shopping online this season, 11% said they were extremely dissatisfied.

A Wall Street Journal snippet (subscription required) on Segway's continuing "issues", from a new CEO to a leaving President (former Subaru USA exec), and now resistance in San Francisco:

John Doerr, Silicon Valley's premier venture capitalist, has been keeping a pretty low profile ever since the tech bust. But Mr. Doerr may be zooming back into the limelight, thanks to the Segway scooter that his venture firm, Kleiner, Perkins, Caufield & Byers, has backed to the tune of millions.

...Mr. Doerr notes that 32 state legislatures have agreed to allow the scooters on city streets, and he calls the scooter a "revolution in clean technology." But San Francisco city supervisors disagree: One calls the scooters the "SUVs of the sidewalks."

According to this Wall Street Journal story (subscription required), more phone subscribers are wising up to cheaper alternatives:

The fight for your $36 a month -- the nation's average local phone bill -- is one of the most contentious battlegrounds in the shell-shocked telecom industry. Local phone companies such as Verizon and SBC have long held a chokehold on the $29 billion residential market, largely because customers had no other options. But now, long-distance providers, cable companies and small upstarts are piling into many local markets, offering discounted rates and "bundled" packages that combine local and long distance into a single bill.

SUVs reached record sales in 2002 and bring profits of up to $10,000 on some of the vehicles according to this Wall Street Journal story (subscription required):

Now, however, some top U.S. auto officials quietly acknowledge signs that the leading edge of consumer culture is starting to shift against the industry's cash cows. The auto industry pays especially close attention to cultural trends, and some of its leaders say they see signs that Americans in their teens and 20s are far less likely than their elders to gravitate toward vehicles that drink a lot of gas.

As expected, a prominent commission has recommended the separation of CEO from board chairman ccording to this Wall Street Journal story (subscription required):

A blue-ribbon panel's endorsement of separate board chairmen or powerful "lead" directors could weaken chief executive officers' once-solid grip on U.S. boardrooms, industry experts say

...The Commission on Public Trust and Private Enterprise was created last year by the Conference Board, a New York business-research organization. The panel's report, released at a news conference here, offered a range of "best practices" to improve governance, shareholder relations and the accounting industry.

According to this Wall Street Journal story (subscription required) on the surprising twist in consumer debt which had been expected to rise:

Outstanding balances on car loans, credit-card loans and other forms of consumer installment debt fell a seasonally adjusted $2.2 billion in November from the previous month to $1.722 trillion, the first drop since January 1998, the Federal Reserve said in a monthly release on consumer credit. The decline was the largest drop since 1991, when the economy was slowly emerging from recession and households were aggressively replenishing their own financial resources. Analysts had expected consumer debt to rise by $4.0 billion in November.

...However some economists said there is an important alternative explanation for the drop in debt balances: the late-year surge in home mortgage refinancing. According to a separate Federal Reserve study, many households have been using cash proceeds from home mortgage refinancing and from home equity loans to pay off other forms of consumer debt. This Fed study, released in its December 2002 bulletin, said about $28 billion in home equity loans and refinancing proceeds were used to pay down other forms of debt between 2001 and mid-2002. The study didn't cover the latter part of 2002, but refinancing activity surged during that period as interest rates dropped to their lowest levels in more than 30 years.

As if former Compaq CEO Michael Capellas' compensation package for leading Worldcom out of bankruptcy wasn't high enough, this New York Times story (registration required) reports on an even bigger pay out package (without the long term value that Capellas' compensation was tied to) being promised to two AT&T Broadband execs being wooed by Adelphia:

If the terms of the employment contracts are approved at a board meeting today, Adelphia could wind up paying almost $65 million over two years to the two men, William T. Schleyer and Ronald Cooper. Mr. Schleyer's package alone could be worth nearly twice the $20 million over three years that was recently awarded to Michael D. Capellas, the new chief executive of WorldCom, which entered bankruptcy listing assets four times those of Adelphia when it collapsed.

The Adelphia contracts underline the increasingly rich payouts being awarded to executives who agree to run bankrupt companies. But the structure of the compensation requested by Mr. Schleyer and Mr. Cooper is also remarkable in several ways, according to Brian Foley, a compensation consultant based in White Plains.

This is a significant development even if the analysts don't think it is earth shattering according to this New York Times story (registration required). Kevin Williamson realized early on that viewers do care about things like the songs or clothes or objects featured on a popular show, and smartly started to list the songs featured on each episode.

Users of the site, www.dawsonscreekcds.com, will be able to select up to 14 tracks for their CD's from an initial pool of about 75. The discs, priced at $11.95, will be made by Mixonic, a CD customization and duplication company in San Francisco.

...P. J. McNealy, research director at GartnerG2 in San Jose, Calif, said the new service was likely to have limited appeal to its target audience, as such "early adopters" already own CD burners and would probably prefer to just download the music instead of waiting for postal delivery. "Certainly there's some appeal to the personalization, but this implementation isn't earth shattering," he said.

From a Wall Street Journal story (subscription required) which had done a series of articles on the issue of spam from all points of view:

• 25 Percentage of all e-mail messages in 2002 that qualify as spam, according to Gartner Inc.
 
• 8 million The number of spam messages the FTC has collected from consumers since 1998
 
• 76 billion Number of spam e-mails that will be delivered in 2003, according to eMarketer.

Jobs is at it again. As expected he used Macworld San Francisco to announce innovative new software and hardware products calling it the "year of the notebook for Apple" and releasing a beta of an internally developed web browser named Safari which is "complementary" to IE and Microsoft was told about it ahead of time according to this Wall Street Journal story (subscription required):

Apple's two new notebooks are PowerBook G4 laptops with 17-inch and 12-inch screens, billed respectively as the largest and smallest laptop screens in the PC industry. The laptops come with several new features, such as built-in Bluetooth wireless technology. The 17-inch PowerBook also has a backlit keyboard with ambient light sensors that automatically light up the keyboard when surroundings grow dim. The smaller laptop will be available later this month for $1,799, while the 17-inch PowerBook will debut in February at $3,299.

In addition, Apple revealed a wireless-networking device, called AirPort Extreme, which uses a speedy new wireless technology dubbed 802.11g and can accommodate as many as 50 users from a base station that costs $199. Cards to connect each laptop computer are $99.

From a Jupiter Research blurb (registration required) on its website about a web seminar. Permission Marketing anyone?

Jupiter Research forecasts that consumers will receive more than 3,900 marketing messages in their e-mail boxes in 2007 - and most of these messages will be ignored because they lack relevance.

The number 5 site on the Web is also following in Google's footsteps according to this Wall Street Journal story (subscription required):

Search site Ask Jeeves Inc. said it has stopped using banner ads, saying they are annoying to users and unappealing to advertisers, and will instead focus on ads tied directly to search terms.

...Last month, the Interactive Advertising Bureau (www.iab.net), an industry trade group that tracks online ads and sets standards, recommended to its members that they stop offering advertisers standard banner ads, and instead offer larger-format ads that are harder for users to ignore. Ask Jeeves, an IAB member, said its decision to drop banner ads wasn't related to the group's recommendation. In the second quarter of 2002, banner ads made up 32% of all ads online in terms of revenue, down from 55% at their peak in 1997, according to the IAB.

United continues to try new ways of keeping its customers including cutting business fares according to this Wall Street Journal story (subscription required). Silicon Valley and San Francisco have been impacted by United's problems in addition to all the dotcom fallout thanks to it having a major presence in the Bay Area:

UAL Corp.'s United Airlines, trying to lure back business travelers turned off by high fares, said it is cutting one-way business fares by as much as 40% for travel to and from its largest hubs, Chicago and Denver.

The airline, which filed for bankruptcy-court protection on Dec. 9, said customers will be able to obtain the savings without advance-purchase requirements or minimum-stay or Saturday-night restrictions. For those able to purchase tickets seven days in advance, the savings are as much as 70% off the current prices for refundable walk-up tickets.