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Hello
Fry's Outpost, Goodbye Egghead
By the Channel Media Team
The Fry’s Electronics wedding
to Outpost should be consummated by now. As you read this,
they’re probably off honeymooning somewhere while coyly checking
out each other’s dowries. Our bet is that this is a great match.
Fry’s needs strong Web presence and Outpost needs
everything else. Outpost chose wisely. The other suitor was
PC Connection, whose true love remains B2B. Outpost
and Fry’s both hold consumers and small businesses dearest
to heart.
Egghead, one of technology retail’s greatest pioneers
has finally succumbed after a long and valiant struggle. We’ll
miss them. Best wishes to Victor, Ron, George, Terry, Jeff, and the
team who shaped and guided this great franchise.
PC Connection recently tapped Ken Koppel as its new CEO. He’ll
report to Chairperson Patricia Gallup. Koppel is former president
of Ziff-Davis Publishing, where Channel Media’s founder Keith
Newman worked for him. Keith says Koppel is a great boss, savvy with
a steady hand.
Manhattan’s J&R has finally reopened after the Sept.
11 tragedy when their store served as a trauma center. Congrats and
may you do well for having done good.
C4Sure may be the right B2B play for Office Depot. We
shall see. Insight recently acquired Action, a $400M
United Kingdom-based IT direct marketer.
BestBuy.com recently launched online information centers for
appliances and cellular phones. Visitors will find in-depth information
on washers, dryers, refrigerators, ranges, freezers and dishwashers
as well as phones because such purchases are complex, says Scott Bauhofer,
Senior VP/General Manager Online Stores for BestBuy.com.
Amazon.com will continue to direct ship electronics items from
its site, but will offer an option for immediate pick-up at local
Circuit City stores and get a piece of the action. The leading
e-merchant has similar deals with Toys ‘R’ Us, Borders
and AOL.
800.com, one of the last pure Web retailers of size has been
busy. It’s raised $20 million in venture, acquired Roxy.com,
EverythingWireless and tapped Holly Files to become their first
CIO. Elsewhere in the Northwest, Djangos.com, an online and
brick-and-mortar Oregon retailer acquired retail chain CD Warehouse
for $3.66 million.
Cellular Warehouse, California's leading independent wireless
phone and pager retailer, recently announced plans to go national
and will move headquarters into Reno. "Cellular Warehouse
and Gizmo Wireless have experienced a tremendous growth
during the past few years through both local and national acquisitions
of wireless retail operations," said President Victor Z. Gossler.
Will someone please warn Nathan Morton?
Navarre is now handling Apple Software for Apple’s
company-owned stores. Beyond.com is opening a Web store for
LynuxWorks and Interact Commerce, makers of ACT!
OfficeMax is offering up to $400 in free products after rebate
with the purchase of Windows XP. "Store associates have been
trained to provide customers quick and easy answers to their Windows
XP questions,” says Chairman Michael Feuer. Gateway is
inviting people curious about the real-world benefits of Windows XP
to attend Demo Days in Gateway stores. "People have been
hearing about Windows XP, and now they're ready for a hands-on assessment,"
says Michael Ritter, vice president of solutions.
Ingram Micro’s IM-Logistics division is providing outsourced
logistics services and supply chain support to Intuit. Under
the new agreement, IM-Logistics serves as the exclusive 3rd party
logistics partner for Intuit's retail channel, fulfilling the
company's world-class software products and solutions for approximately
7,500 U.S. stores.
eMachines reported results for its most recent quarter with
operating losses improving by more than 50 percent from the previous
quarter. Net loss from operations for Q3 was $8 million, or $.05 per
share, compared to a net of $17.7 million, or $0.12 per share in Q2.
Continuing to operate virtually debt-free, eMachines increased
its liquidity in Q3 to $191.3 million and restricted cash from the
$153.0 million reported at the end of Q2. "Even in a difficult
PC market, we are well-positioned to take advantage of many opportunities
by successfully executing," says CEO Wayne R. Inouye.
Microsoft and Trans World Entertainment Corp. announced
a comprehensive business, technology and marketing alliance involving
the integration of Microsoft.net, Windows XP, Windows Media and MSN
technologies into Trans World's 700 "FYE"
branded music and video retail outlets across the U.S., as well as
its fye.com Web site. FYE, the largest mall-based music and video
specialty retailer will employ Microsoft .net, Windows Media and Windows
XP to deliver a richer music-shopping experience both in-store and
online according to a company spokesperson.
NVIDIA announced the opening of the "NVIDIA Gear
Store," an online shopping site, selling exclusive NVIDIA
logo gear and merchandise at http://www.nvidiashop.com. "We have
been inundated with requests," reports Dan Vivoli, marketing
VP.
Got news? . Share it with us. Contact: keithn@telocity.com
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Looking to hire someone in a channel-related position (i.e. Buyer,
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A
New Beginning
Keith Newman, Editor-in-Chief
Ten years ago, I started a publication
called Computer Retail Week (CRW) that became the industry’s
weekly standard. The experience was a pure, unadulterated kick in
the pants.
Computer technology was a dynamic growth market with entirely unique
characteristics and characters. We had a great team to serve the technology
retailers information needs. Retail is still exciting but over the
decade the channel has significantly broadened. Online retailers did
not exist in 1991. Direct marketing organizations are bigger, stronger
and enjoy a credibility they didn’t have back then. In fact,
the Channel today is critical to the success or failure of virtually
every technology product from microprocessors and components to woofers,
tweeters and carrying cases. Now, thanks to the great folks at Vision
Events, Insider Marketing and Ingram Micro, I get to provide you and
the Channel with ChannelMedia a new endeavor for these new times.
In a positive new way, technology has changed us. Today we can bring
the Channel the news it needs by e-mail and via the web much more
efficiently than paper. We can use these technologies to can editors
and readers together because now, instead of cumbersome Letters to
the Editors you can just zap us an e-mail in praise or protest of
what we’ve said and we can share more of your comments with the
entire community.
I’m excited to bring you this first issue but I expect each new
issue will be even more valuable because your comments will help guide
us. ChannelMedia is intended to be a community effort. To achieve
this we need to hear what the community thinks, hopes for and worries
about. In return, we will make you better informed and more productive.
My special thanks to Scott Reedy, Shel Israel and my other contributors
and supporters who have helped make my dream a reality.
Keith Newman is Editor-in-Chief of ChannelMedia and the CEO of Newman
Media.
Contact: keithn@telocity.com
(top
of page)
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Windows
XP — Freedom on Microsoft's Terms
By Suzzana Ellyn, ARS Photo Sharing Analyst
Windows XP promises consumers the "freedom
to create, connect and communicate." It is indeed great for digital
technology beginners. Imaging and audio services sit right on the
desktop, making them easier to use than ever before, but is this freedom
or subliminal control? Users may be so blinded by all the hoopla,
they may not notice they’re being channeled to a select group
of 3rd-party Microsoft vendors, selected not necessarily for quality
but because they have the financial wherewithal to extract heavy toll
charges.
In order to be featured on Windows XP, third party software must meet
compatibility standards and, according to one resource, need to ante
up to $1 million to be part of the US Release. Want photo printing?
XP limits you to Kodak, MSN Photos (Fuji), and Shutterfly. In addition
to the rumored upfront fee, third party online photo services interested
in being featured in the new OS must also pay a fee for every picture
printed via XP. This is a deadly barrier for small companies, like
a Club Photo or FotoTime, who frequently bring the freshest innovation
to the game.
Microsoft does promise to offer online photo finishers a way onto
the XP Online Printing Wizard. They'll have to develop drivers to
put their icons into the OS. It would then be left up to the XP user
or a third party to install and set up that driver, which can be tricky
for novices.
Is XP is a viable threat to the online photo sharing community? Perhaps.
Perhaps not. Companies like PhotoAccess shrug it off. They see more
value to leveraging established retail customer relationships than
getting embedded on an OS. They've established more than 20 private
label relationships with drug stores, photo labs and retailers, arguing
rather effectively that XP is not sufficiently compelling to change
people's habits.
Internet Photo finisher dotPhoto is also thwarted by last month’s
launch hoopla. They think wireless apps offer greater promise and
predict that within two years, digital camera users will transmit
images directly from their camera to the Internet. They predict digital
cameras will be built into cell phones and cellular modems will be
built into digital cameras. "Click & Deliver" systems
will send photos directly to the server eliminating the difficulty
of uploading photos and make the OS advantages irrelevant.
In Microsoft’s favor, it is rekindling the excitement for online
photo services that faded with last year’s dotcom implosion.
The heavily financed XP launch is raising interest and enthusiasm
for recently stalled e-commerce activities like online photo sharing.
ARS, Inc. is a La Jolla, California-based business-to-business Competitive
Market Intelligence Company specializing in the daily tracking and
analyzing of the e-commerce, PC, and Networking markets.
Visit us at www.ars1.com. Contact: Doug Moore dmoore@ars1.com
(858) 551-0008 (top
of page)
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Job
Opportunity: Product Managers Needed
Daisytek, distributor of computer supplies Dallas, needs Product
Managers in several categories. Min 5 - 10 years of channel
experience.
Contact: sreedy@daisytek.com |
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Online
Retail Quarter May Top $25 billion
By
Michael Cruz, GartnerG2
Question:
Will consumers worldwide go online to do their holiday shopping this
year?
Answer:
Yes! At $25.3 billion, the forecast for fourth quarter Internet retail
sales will exceed last year's fourth quarter total by 39%. Several
factors are driving e-commerce growth in 2001:
The online population is larger and more experienced. A push by some
governments, such as Singapore, Korea and Hong Kong, to bring their
citizens online has contributed to rapid Internet penetration.
In Europe, the rapid growth of bricks-and-clicks retailers has lifted
consumer confidence. Customers prefer to buy online from a brand they
know and trust.
Retailers in Australia, New Zealand, Hong Kong, Singapore, Korea and
Taiwan are developing multichannel sales and marketing models, including
some direct selling of products and services on the Internet.
Adoption of broadband is improving the online experience of many potential
consumers. Also, more and more consumers access the Web via TV and
mobile devices, increasing their opportunities to spend money online.
Vendors continue to improve their online presence. In the United States,
satisfaction with online retailers was much higher in the 2000 holiday
season than in 1999, with 75% of buyers saying they were very satisfied
with their experience. In Europe, e-tailers are improving their site
functionality. Flexible delivery times and new delivery methods are
also encouraging customers to buy online.
In Asia Pacific, retail banks, credit-card companies and domestic
consumer portals are actively promoting and fostering Web consumption
with site certification and extended customer loyalty programs. Even
here, the fourth quarter is becoming a holiday shopping season. Christmas
has penetrated the local culture of many non-Christian societies as
a family and friends gift-giving celebration.
Although holiday online shopping continues to grow, the rate of growth
is slowing. A recent GartnerG2 survey of 16,449 U.S. consumers indicates
a 3% decrease in U.S. holiday shopping as a result of the 11 September
attacks. And several other factors are slowing growth:
Narrow-band access prevails in much of Europe. Slow access discourages
consumers from browsing retail Web sites for long periods of time.
In North America, retailers expect one of the weakest holiday spending
seasons in the past 10 years. Like the brick-and-mortar channels,
e-commerce sales will reflect this weakness as well.
In Asia Pacific, slow financial recovery from the 1997-1999 regional
economic slowdown has been exacerbated by a multinational economic
downturn, slowing holiday shopping.
Several inhibitors to online shopping are specific to Asia Pacific:
The great diversity of languages, cultures and religions is difficult
to serve with a single retail business model.
Concern about secure messaging technologies and Web servers, privacy
of personal information, true identity of host Internet service providers,
hacking and online viruses is high relative to the number of Web users
here.
Many Asians still prefer face-to-face buying and live bargaining -
mail order is only popular in Australia, New Zealand and Japan.
Despite the continuing dot-com consolidation and economic uncertainty,
GartnerG2 expects an appreciable increase online holiday sales this
year. Steady growth in the number and experience-level of Web users
will drive the increase as the Internet becomes an increasingly important
retail channel.
Michael Cruz is a senior research analyst in Gartner Research.
Prior to joining Gartner, Mr. Cruz was a professor of communication
arts at the University of Wisconsin. He holds a bachelor's of science
degree in math, and Master of Science and doctorate degrees in communication
from Michigan
State University.
Contact: michael.cruz@gartner.com
Visit GartnerG2.com
for more information.
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of page)
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Bright
Hopes for the Season
Keith Newman, ChannelMedia Editor-in-Chief
You listen to the predictions and retailers
might consider staying under the blankets until next spring. Everywhere,
it feels like the season to be somber. Are there no bright hopes?
Do we dare open our mail, including those 20 Holiday catalogs-a-day?
Is e-mail spam any better? Intel's profits fell almost 70 percent.
Who’s didn’t? If companies haven’t lost a fortune this
year, they weren’t really trying. Merrill Lynch says this year’s
PC sales will shrink by six percent in the U.S. and 17 worldwide.
Aftermaths of 9/11 horror, predictions of a looming global recession.
In a recent research report the bank predicted dismal global circumstances
will lead to a decline in unit shipments, revenue and average sale
prices. Recovery, the company added, is at least a year away.
Horsefeathers. I see lots of reasons to be optimistic.
True, it’s a Holiday season like no other. It’s even less
materialistic—never good for retailers. But people this year
will want to express their caring to loved ones, I predict. People
will spend on this, our first chance as a nation, to celebrate life.
Web sales are most promising. Everyone we ask says Online sales are
robust. Amazon is flirting coyly with its first profits ever. The
professional forecasters are talking triple digit growth Let's just
hope their crystal balls don’t need defogger.
There’s compelling evidence that PCs will enjoy strong sales
in 2002, not just because the 2001 comp figures were dismal. Faster
Web access and better Web business services and a strong game/entertainment
market are all cause for optimism.
What about this quarter? Yikes, isn't anything out there hot? Alex,
can I have "technology products that start with X please? "
WindowsXP! X-box! How ‘bout XML—the stuff behind Microsoft.NET’s
curtain? Besides the boon to Nanook of the Northwest, there are lots
of silver linings. CDRWs are walking off the shelf and we haven’t
even got to the gift-giving part of the Q!
Gateway may be consolidating its stores. But Apple’s opening.
The Palo Alto store is almost walking distance from Steve Jobs house.
If needed, he might just go down there to sell them one at a time.
I predict handhelds will remain hot, particularly units well-integrated
with cell phone technology. Digital cameras that can store 30+ high
resolution photos and storage/player devices that record and play
songs better, cheaper and faster will be under forests of Holiday
trees this year. And if you feel really generous, I’ll send you
my address.
What do you think? Will this Christmas turn green or stay red.
Keith Newman is also CEO of Newman Media. Contact: keithn@telocity.com
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Handheld
Makers Pursue Corporate Customers
By
the Channel Media Team
Palm stands as one of the few companies
ever to beat Microsoft in a prolonged head-to-head fight. Palm and
its OS licensees like Handspring have significant edge in consumer
sales over Microsoft’s Pocket PC 2002 and licensees like Compaq
and Hewlett-Packard.
But consumers were only the preliminary bout. Now comes the fight
for corporate and business markets.
While the consumer market is not saturated, observers say it has higher
penetration than corporate and is feeling margins tighten from pricing
pressure and low consumer confidence. All players are eying the corporate
customer and agree wireless is where the war will be fought.
Everyone’s touting great new features that are not quite ready
for prime time. Promising new technologies are only available as add-in
cards or as 3rd-party peripherals. Not that add-ins are bad, but many
customers may be disappointed to learn they have to buy add-ins to
get the features they wanted in the first place.
Steve Ballmer, Microsoft's CEO, proclaimed that business users want
the PDAs to be an extension of their desktop, particularly e-mail
and Web surfing. He said PocketPC 2002, along with a slew of new products,
was well positioned to meet that demand with Bluetooth’s short
range wireless connectivity, 802.11 wireless connectivity and cellular
capabilities.
All three are only available today as add-ins.
The same is true for Palm. They’ve suffered several setbacks
that include shelving its cellular device at least for this year,
backing out of cellular deals with Motorola and Nokia.
Palm licensee Handspring has unveiled the Treo which seems to be the
first true all-in-one handheld. They’ve replaced the usual PDA
navigation tools with surfing and e-mail capabilities. The catch is
that Treo won’t ship until later this year or early next, losing
a critical time-to-market edge on Compaq, H-P, NEC and others built
on the Microsoft OS.
Microsoft has repeatedly tried and failed to make headway in a market
dominated by its rival. It has revamped its OS once again and this
time it looks impressive. Already Compaq's iPaq is making strong headway
in the business sector, and while it does not equal Palm in units
sold, in a recent quarter it equaled Palm's revenue.
What’s at stake is the high margin segment. In today's depressed
sales environment, this is the area of growing concern to both camps.
"You can own the enterprise sale, but you cannot in the consumer
market," said Gigi Wang, IDC’s vice president of communications
and Internet research. And that means add-on sales, l docking stations,
expanded keypads and so forth.
There are strong differences between the two camps, at least right
now. Palm and its licensees are still primarily organizers. Microsoft
is attempting to extend the desktop it already owns, with scaled down
versions of classic Microsoft apps. Palm plans to add richer multimedia
features in the near future, the result of its purchase of Be.
These differences are expected to diminish over the next year. Palm
is asserting it will move more toward a PocketPC 2002 look rather
than the other way around. Whether it can survive a new competitive
assault from the Redmond powerhouse remains to be seen.
Contact: Shel Israel Shel@sipr.com
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AMD
Inside? Could Spell Trouble for Retailers
By
the Channel Media Team
What do HP and Compaq really have in
common? They are the only two major PC makers using the Athlon XP
microprocessor from Advanced Micro Devices (AMD). AMD has decided
to use a new method to measure power and performance. It may be more
accurate, but also leaves retailers with the headache of comparing
apples and oranges to customers who don’t buy when they get confused.
Instead of using the traditional MHz and GHz tools to measure chip
speed, AMD is using a convoluted tool to measure its new generation
versus its last. In the process, it takes a cunning competitive shot
at arch rival Intel’s Pentium 4 .
AMD claims, with some backing from independent test labs, that tools
like MHz are not accurate for measuring real performance. They argue
that MHz only tests the silicon equivalent of RPM rather than real
horsepower.
They’ve launched an effort, called the True Performance Initiative
(TPI), to help develop new metrics or benchmarks based on the X86
architecture. They’ve enlisted a number of 3rd party companies
to help develop the TPI, and it is expected to release the new standard
early next year.
AMD is not the first to try. Apple Computer has been campaigning for
years with its PowerPC. More recently, Transmeta has argued current
benchmarks don’t measure true performance. Neither company has
AMD’s heft. Their championship of a new system could tip the
balance, but in the meantime dealers are left with two measurement
systems between competing major brands.
Jerry Sanders, AMD's chairman and chief executive argues TPI is necessary
to overcome steep marketplace barriers. For 20 years, dealers have
been telling customers that MHz was the right tool to judge chips.
Then there’s Intel’s massive marketing budget selling the
message that it still is
But clearing confusion will be a challenge at the point of sale.
Retailers will be receive Compaq, Hewlett-Packard and other boxes
that will list AMD chips as Athlon XP 1800+, 1700+, 1600+ and 1500+
with chip speeds of 1.54GHz, 1.47GHz, 1.40GHz and 1.33GHz respectively.
That seems rather straightforward, until the next step when AMD positions
these new processors versus existing Intel Pentium 4 chips that run
at 1.8Ghz, 1.7GHz, 1.6GHz and 1.5Ghz,in other words, against faster
chips.
AMD quotes a number of independent labs that clock its chips with
a 25 percent performance advantage. Sanders vows AMD will always position
its chips this way against Intel.
Chip speed is listed in the errata information on the newest systems,
and there have already been customers reporting they thought they
were buying a 1.8 Ghz chip rather than a slower one that performs
tasks at the same relative speed. It gets further complicated when
one considers that Compaq and HP also use Intel chips. Reps will have
to know the difference and sales people will need to be able to explain
it on the floor.
The issue may get more complicated before it gets simpler. Intel is
expected to speed up its Pentium 4. Then it might be the one calling
for new benchmarks.
Contact: shel Israel shel@sipr.com
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The
85 Percent Rule
By
Scott Reedy
Some time ago, when I worked at Ingram
Micro, my boss was Dave ‘Jaz’ Jaskulke. Dave was a great
mentor. Like me, he’s a perfectionist; or at least he was. He
taught me, as he had learned, what I call the 85 Percent Rule.
Dave had been working on a project for our Marketing VP Larry Carpenter.
Larry was a gentle, youngish-looking man from the South and had a
certain manner about him. Dave had prepared a well-polished report
for Larry. I know. I saw Dave hunched over his computer for about
a week, concentrating deeply, spitting out endless copies to the printer,
and generally ignoring his personal life.
Finally prepared, Dave went into Larry with a masterpiece. Indeed
it was. Larry complimented him on its thoroughness and detail. Then
he made his point: Dave had spent about five times longer on it than
he really needed. He should have done this in one day, not five. If
he had done a basic report he would have been able to get much more
done that last week. As he said, “You know, sometimes 85 percent
is just perfect."
I have followed that rule to this day. It has helped me get more balanced
in my work and life. Before, it was not uncommon for me to put in
10-12 hour days. My reports were crystal clean, my work prolific.
I was getting things done at a good clip. But it was often for naught.
When I saw others reports they were neither as clean nor organized
as mine. I thought mine were better and indeed they were. What I was
failing to realize is that it wasn’t the report that mattered,
it was the data.
At its basic mathematical level this is the Law of Diminishing Returns.
It applies to every project, every task. If you try to define every
little detail, you will end up spending twice as much time on that
project or task. Try it, you’ll see. Next time apply effort to
where you think you have accomplished the task at 85 percent. You’ll
find you can get five key activities accomplished that day instead
of two.
Scott Reedy is an Independent Channel Consultant. With over 15 years
in the computer channel he has had tenure at several companies including
Apple, Ingram Micro, Multiple Zones, and Onsale / Egghead.com.
Contact: scottreedy@hotmail.com
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of page)
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