 |
|
1.
As if selling games wasn’t fun enough, it seems that the retailers
who touch the entertainment category seem to be mopping up over
retailers who are tied exclusively to PC’s and home office products.
Just consider the recent results from Barnes & Noble.com, EB and
our old friends at Game Stop. GameStop, the 1,038-store chain
and the largest specialty retailer of video game software, just
raised about $326 million as part of the second biggest initial
public offering of the year, according to underwriter Smith Barney.
The
unit of U.S. bookseller Barnes & Noble sold 18.1 million Class
A shares
at $18 each, which
gave GameStop a market value of $974 million based on 54.1 million
Class A and B shares outstanding. The IPO ranks as this year's
second biggest, behind the $980 million offering by Loews Corp.
The stores, which are currently operated under the GameStop, Babbage's,
Software Etc. and FuncoLand names, also sell entertainment software
for personal computers and other “twitch/geek” stuff for the “X/Y”
gen. Sales for GameStop are expected to have risen to $1.12 billion
for the fiscal year ended Feb. 2 from $757 million in the prior
fiscal year, the company said in an IPO-related filing with the
Securities and Exchange Commission. Net proceeds of the offering
of approximately $300 million will be used to repay $250 million
of indebtedness to Barnes & Noble and for working capital and
general corporate purposes. Barnes & Noble will retain a two-thirds
stake in the company following the initial sale, in the form of
Class B shares that have 10 votes per share as opposed to one
vote per Class A share.
2. But things remain positive at GameStop’s #1 rival EB.
While Electronics Boutique announced that it will close 29 kids
toy stores and look to sell 22 sports collectibles stores, the
goal is to get its house in order and focus exclusively on the
sale of video games and accessories. The company plans to convert
12 of its children's toy stores into conventional Electronics
Boutique locations, in addition to opening 200 new retail stores
in the next year to sell video games. Employees displaced by the
closings will be offered alternative jobs within the company.
Pennsylvania-based Electronics Boutique will take a charge of
$16 million in its fiscal fourth quarter to account for the restructuring.
"These strategic measures reflect management's desire to focus
its energy and resources exclusively on the significant growth
opportunities in the video game industry, especially in light
of the results we achieved in our core business in a challenging
retail environment this past year," said Electronics Boutique
CEO Jeffrey W.Griffiths. Electronics Boutique operates 936 retail
locations worldwide. Over the past decade, the interactive gaming
market has developed considerably and Electronics Boutique has
established itself as a well-respected leader in the industry
with a strong customer base in both domestic and international
markets. Given growth projections for the video game industry
of at least 20 percent annually for the next three years, we believe
that the most effective use of management's time and the company's
capital is to focus on this category.
3. With both Amazon and GameStop to keep an eye on, another
company to start to watch its mix shift is bn.com and the company’s
sales look to be doing well too. Barnes & Noble.com full-year
consolidated sales were $404.6 million, an 8 percent increase
from sales of $374.9 million for full-year 2000. Sales of books/music/video
in the consumer business increased 11.4 percent in the fourth
quarter of 2001, which was partially offset by slower sales from
the corporate business. Consolidated fourth-quarter sales were
$115.0 million. For the fourth quarter, the company's EBITDA was
($21.4) million, a 58 percent improvement from the company's comparable
prior year period EBITDA of ($51.2) million. For the full year
2001, the company's EBITDA improved 47.0 percent to ($92.5) million
from ($174.5) million for 2000. "The largest in-stock selection
of any online bookseller, combined with our speedy delivery and
special holiday merchandising, made Barnes & Noble.com the online
destination of choice for book lovers this season," said Marie
Toulantis, president and chief operating officer of Barnes & Noble.com.
The company achieved an 8 percent sales growth while at the same
time reducing its year-over-year operating expense base by 24.5
percent. Barnes & Noble.com acquired more than 3.3 million new
customers during the year, bringing the cumulative customer count
to more than 11.2 million. The cost of customer acquisition declined
dramatically in 2001 to $14.73 from $23.29 in 2000.
4. Apple dropping Circuit City from its roster of retail
chains is very interesting indeed. After more than a year and
a half, Apple and Circuit City are terminating their arrangement.
Both companies are calling it "amicable." Circuit City said it
would continue to carry iMacs as it clears through its existing
retail and distribution center inventory, which may take months.
Cimino also indicated that Circuit City will continue to carry
Mac-specific software and accessories through the coming year
as its Mac inventory is depleted.
5. Sales of games for computers and video game consoles
increased 7.9 percent in 2001 to $6.35 billion, according to recent
data from leading sales reporting firm Interactive Digital Software
Association (IDSA). "While most analysts had predicted flat year-on-year
sales of computer and video games in 2001, especially after the
September terrorist attacks, the industry defied these forecasts
to post solid year-on-year revenue increases, and established
a strong foundation for the explosive growth expected in the coming
three to five years," said Doug Lowenstein, president of IDSA.
The IDSA game sales growth figure is somewhat lower than the overall
sales growth for the industry, which includes games, video game
consoles and accessories. In a year in which three new game consoles
from Sony, Microsoft and Nintendo were introduced, overall industry
sales increased 43 percent to $9.4 billion, according to market
research firm NPD. Game sales are expected to increase further
in 2002 as studios roll out titles they have been developing for
each of the new consoles.
6. PDA’s Pop: global shipments of personal digital assistants
(PDAs) grew 17 percent in 2001 despite a weak global economy and
continuing erosion of U.S. consumer confidence. Total shipments
reached 8 million units for the year. Even though these numbers
seem positive, the high-tech market research firm reports that
it represents a significant slowdown growth rate from the previous
year, according to Cahners In-Stat/MDR. Neil Strother, a senior
wireless handset analyst with the researcher said, "Key drivers
for the coming years will be more robust devices with newer and
more reliable applications, backed by better wireless data and
phone networks; wider use of Bluetooth and other short-range wireless
technologies; and lower unit prices. "Shipments in 2002 for PDAs
will increase about 18 percent as new manufacturers enter the
market and a wave of wireless functionality takes hold in a big
way. The future will be all about making the PDA a more ubiquitous
device and more useful to both the mobile business user and the
on-the-go consumer." For more see http://www.instat.com/.
7. His name, is Mudd. "2001 was a breakthrough year for
MusicMatch. We've consistently been recognized as a leader in
our market and have posted impressive numbers during the past
year," said Dennis Mudd, CEO of MusicMatch. "As consumers continue
to realize the benefits of digital music, MUSICMATCH will be at
the forefront of this revolution." According to NPD, the number
of MUSICMATCH Jukebox Deluxe units sold during 2001 increased
by 196 percent. Quite a climb, but a tentative perch.
8. What recession? U.S. chain store sales rose in the week
that ended Saturday, a possible sign that the economy is edging
its way out of recession, according to two reports out Tuesday.
U.S. chain store sales rose 2.1% during the week ended Feb. 9,
after a 0.7% drop the prior week, the Bank of Tokyo-Mitsubishi
and UBS Warburg reported in their Weekly Chain Store Sales Snapshot.And
Instinet Research's Redbook Retail Sales Average rose 0.9% in
the week ended Feb. 9 compared with the same period last month.
Compared with the same week last year, the Weekly Chain Store
Sales Snapshot index grew 4.1%, the strongest reading in almost
a year and well above the prior week's 2.8% year-over-year gain.
Separately, U.S. retail sales at discount, chain and department
stores rose in the first retail week of February, as retailers
cleared the last of their winter inventory, Instinet Research
said in its weekly Redbook Retail Sales Average report on Tuesday.
Year-over-year sales rose 4.2%, as did month-to-date sales compared
to February 2001. The average is compiled from a sample of general
merchandise retailers representing about 9,000 stores. Same store
sales measure revenues at stores open at least a year.
9. Kool Quote: “It’s a fine line between where consumers
might get frightened — ‘Are they getting watched?’ — versus TiVo
and others wanting to make our viewing experiences better and
more tailored to our interests,” said Greg Ireland, an industry
analyst with the Gartner Group market research firm. By the way,
when gathering customer marketing research, TiVo says it does
not link viewer data to their name, gender or age — only into
one big database that can identify users by ZIP code.
10. Not so fast - Digital River, Inc. (Nasdaq:DRIV), a
leading global e-commerce outsource provider, today announced
it has amended its agreement to acquire certain assets of Beyond.com
Corporation (Nasdaq:BYND), a leading provider of e-commerce technology
and services. In the original acquisition agreement, Digital River
agreed to acquire certain assets of Beyond.com's eStores and Government
Systems Group. Because certain closing conditions related to the
acquisition of the Government Systems Group could not be met,
Digital River elected not to acquire that portion of Beyond.com's
business. The new agreement provides that only Beyond.com's eStores
business will be acquired by Digital River. Under the terms of
the new agreement, Digital River is not assuming liabilities of
Beyond.com other than obligations under the Beyond.com client
contracts. Digital River has agreed to acquire substantially all
of the assets and customer contracts related to Beyond.com's eStores
business in exchange for $4,010,000 in Digital River common stock,
subject to certain escrow and sale restrictions and certain resale
registration rights. The agreement also provides Beyond.com the
opportunity for an earn-out of an additional $1,850,000 in Digital
River common stock, and provides for purchase price reductions
in certain events. In the original agreement, the purchase price
to buy both Beyond.com's eStore and Government Systems businesses
was $11 million, of which $3.5 million was cash and $7.5 million
was Digital River common stock. Additionally, the original agreement
would have given Beyond.com the opportunity for an earn-out of
an additional $1.5 million in Digital River common stock and provided
for purchase price reductions in certain events. The amended offer
remains subject to bankruptcy court approval and certain other
conditions. Beyond.com has filed for chapter 11 bankruptcy protection.
(top of page)
|
|
 |
|
|
WalMart,
OfficeDepot, Fuji, DaisyTek, Sharper Image, Staples...
By ChannelMedia Staff
Staples wants your tired,
your old, your broken PC’s for nothing. Most PC recyclers charge you for the privilege of tearing them apart
and scrapping them. But Staples, being the proud eco-sensitive merchant they are, will pay you $100 if you're
in the market for a Pentium4 or $20 off other store merchandise. Staples recently told Wall Street that
earnings for the Feb quarter will reach $0.25 per share, before an expected charge for approximately 30 store
closings and comparable store sales will come in slightly behind current expectations. "As a result of strong
gross margin performance and continued tight expense control, Staples anticipates reporting better than expected
earnings despite weak top line growth," stated Ron Sargent, who became Staples chief executive officer Feb. 1.
"The majority of the sales shortfall relates to the company's strategic decision to forego less profitable sales
of computers and some electronics to consumers during the holiday season, in keeping with our `Back to Brighton'
initiative, which focuses on small business customers."
ChannelMedia wants your news. If you are doing something impactful
at retail we want to hear about it. Send email to keithn@telocity.com.
Fuji is launching a retail marketing initiative that will provide retailers with the tools they need to
build their business and maximize profitability by reaching out to consumers who would like to have their
digital pictures printed professionally. A recent study conducted on behalf of Fujifilm found that by the
third quarter of 2002 nearly 25% of American households would own a digital camera. Currently, 85% of digital
camera owners are printing pictures, but only 3% are doing so at retail. The same study found that 57% of digital
camera users don't know if their local retailer offers digital camera developing; however, of those who do print
their digital images, most would print at retail if the service was available. These numbers illustrate an enormous
opportunity for retailers to either establish or expand their current digital camera developing service options for
consumers. "With our state-of-the-art Frontier Digital Lab Systems, new Printpix DigiCam Picture Center 1000
self-service kiosk and retailer service and support programs, Fujifilm has the tools to get any-size retailer up and
running in the profitable world of digital camera developing," said Senior Vice President Bill DiMinno.
Through technical innovation and operational diligence, we now provide what we believe to be the highest quality,
lowest cost ISP infrastructure in the United States,” said Nick Grouf, president and chief executive officer, PeoplePC.
That said the company reported gross margins of $19.7 million compared to a loss of $29.2 million in fiscal 2000.
Net revenues were $174 million compared to $90.2 million in the year 2000. Excluding charges, the company reported a
net loss for fiscal 2001 of $74.9 million, or $0.67 per basic and diluted share, compared to $236.0 million, or $3.86
per basic and diluted share for fiscal 2000. PeoplePC membership at the end of fourth quarter 2001 increased to 582,000
versus 430,000 members at the end of fourth quarter 2000.
Wal-Mart’s sales increased 8.3 percent for January. The retailer said net sales in the four weeks ended Feb. 1 rose
13.8 percent to $15.3 billion from $13.5 billion in the same year-earlier period. At outlets open more than a year,
sales at the world’s largest retailer rose 8.6 percent last month, while sales at Sam’s Club were up 7.0 percent.
Target, the No. 3 U.S. discount chain, said its fiscal fourth-quarter profits will beat Wall Street forecasts. It also
reported a 5.8 percent increase in January sales at stores open at least a year.
OfficeDepot.com has a very cool promotion: Pick the winner of each event of the Winter Olympics and win $1 million.
Very elegant the way the promotion is set up and designed with cool colors, graphics and prompts for favorites in
each category. Hey, creative and fun idea…Office Depot is a sponsor of the 2002 Games. Hey guys, who’s your
developer/designer? The retailer Office Depot announced that it has started offering its online customers tools to
create and launch a direct mail campaign through its Web site. The company Zairmail, which is behind Office Depot’s
new direct mail service, will use its mail-on-demand software and Internet infrastructure to power the service.
Businesses will be able to send targeted direct mail pieces such as letters, postcards or flyers with the click of a
mouse. Direct mail has been shown to return up to $10 for every dollar spent, according to the Direct Marketing
Association. Historically, it has been most commonly utilized by medium and large businesses that have the time and
expertise to manage elaborate direct mail campaigns. The service, called Office Depot Express Direct, allows small
business customers to launch entire direct mail campaigns online. Now businesses can send hundreds or thousands of
letters, postcards or flyers straight from their PC in just 15 minutes. This compares to the three weeks or more
required by traditional direct mail processes. Zairmail's nationwide network of printing facilities ensures that the
mail is printed and delivered to recipients in the fastest manner possible, often overnight. As an added bonus, the
service is less expensive than doing it yourself due to the tremendous economies of scale. "Office Depot is pleased
to offer Office Depot Express Direct, a cutting-edge service that enables our small business customers to conduct
sophisticated mailings with a click of a button," says Monica Luechtefeld, Office Depot’s Executive Vice President of
E-Commerce. "The launch of Office Depot Express Direct on our Web site underscores our commitment to providing our
small business customers with the tools and services they need to help them work smarter not harder. It's simple to
use, but most of all extremely cost effective."
Sharper Image said January sales increased 16 percent to $24.7million from last January's $21.3 million, which had
been a 33 percent increase over the prior year's January. January total store sales increased nine percent to
$12.0 million from $11.0 million; the previous year's total store sales had increased 19 percent. The prior year's
comparable store sales had increased 10 percent. Catalog sales increased 41 percent to $8.9 million from last
January's $6.3 million, which had increased 59 percent over the prior year. Internet sales decreased six percent
to $3.7 million from last January's $4.0 million, which had been a 44 percent increase over the previous year's
January. Internet sales for the month, excluding auction sales, increased 10 percent. "We were pleased with our
strong finish to the fiscal year. Our product mix of Sharper Image Design proprietary products and private label
products were the primary driver in our three percent comparable store increase for January. Additionally, the
January results were achieved with significantly increased gross margin over last January," said Richard Thalheimer,
founder, chairman and chief executive officer. "With these strong December and January sales and gross margin
results, we expect to exceed the consensus estimate of $0.06 cents earnings per share for the year. Subject to
our year-end closing process, we believe we will complete the year in the $0.07 to $0.09 cents earnings per share
range."The sales comparisons, which were difficult throughout 2001 because of the phenomenal Razor scooter sales
in 2000, actually masked the strength of our core business. When the extraordinary scooter sales are excluded from
the comparisons, annual total company sales increased 13 percent, total stores sales increased 14 percent, comparable
store sales increased two percent, catalog sales increased 23 percent and Internet sales, excluding auction sales,
increased 16 percent," Thalheimer said. "This is a great result in an extremely difficult environment.
VENDORS: Looking for Sales Execs? Contact: Kenneth Pearl
Executive Search - ken@kennethpearl.com
Daisytek reported third quarter net income from continuing operations
of $5.0 million and diluted earnings per share of $0.29, excluding
special charges. Net income, as adjusted, represents a 33% increase
over the prior year adjusted net income of $3.8 million and diluted
earnings per share, as adjusted, represents a 16% increase over
$0.25 for last year's quarter. Revenues for the quarter increased
23% to $309.3 million compared to last year's quarterly revenues
of $251.0 million.
Another bird flies south in the winter. Former
Motorola executive Jocelyn Carter-Miller has been named Chief
Marketing Officer at Office Depot reporting to Bruce Nelson, Office
Depot's Chairman and CEO. In her new role, Ms. Carter-Miller will
have responsibility for the Company's marketing efforts across
its retail, contract, catalog and e-commerce businesses. She will
oversee all the strategic, operational and financial aspects of
the Company's multi-channel marketing programs, advertising, direct
mail and other special marketing initiatives. Carter-Miller succeeds
Mike Haaf, former EVP of Marketing, who has decided to leave the
Company to pursue other opportunities. Bruce Nelson, Chairman
and CEO of Office Depot, said: "I am thrilled to announce another
key addition to our senior management team. The appointment of
Jocelyn to the newly created position of Chief Marketing Officer
is a critical next step in our goal to furthering our global leadership
position in the office products sector. In 2001 we achieved a
number of important initiatives, not the least of which was ensuring
our day-to-day execution across our North American retail stores
and warehouses. In 2002 we are now turning our efforts to a more
aggressive focus on attracting and retaining business customers
across all channels.
(top of page)
|
|
 |
|
|
Wal-Mart's
Size Could Be Its Demise
By Geri Spieler, GartnerG2
Wal-Mart
Stores, Inc. will record more than $220 billion in revenue for fiscal
2002, making it the world's largest company in terms of revenue.
Last year, Fortune listed ExxonMobil Corp. as the world's biggest
with $212.9 billion in revenue. Wal-Mart's sales for fiscal 2002
were up 13.9 percent from the same period a year ago. The company
forecasts five percent sales growth for January 2002.
GartnerG2 Analysis
The surprise is that a retailer has passed all manufacturers to
become the largest company on earth. This signals a fundamental
shift in the economy. No retailer has been able to sustain growth
to this level. Wal-Mart has set the standard for technology-based
supplier relationships in its field—but its achievement goes beyond
efficiency. Its market pre-eminence is due to the unequalled alignment
between its low-prices promise to consumers and its business processes.
By promising "every day low prices" and refusing to take promotional
"bribes" from manufacturers, Wal-Mart has created a smooth, predictable
product flow from forecasting through managing inventory to stocking
shelves. But just replicating its technology infrastructure and
low price-promise doesn't guarantee a Wal-Mart-sized success. The
market today is focused on brand identity and niche services—two
forces that Wal-Mart itself is struggling to address. In effect,
Wal-Mart's strategy has limits, which is why it is attempting to
create smaller, more focused stores that take aim at a different
target—supermarket chains.
The Wal-Mart warning
Competing on price alone will not sustain Wal-Mart's double-digit
growth. Consumers increasingly view themselves as individuals, and
at the same time, as members of age, socio-economic or special-interest
groups. Smaller, niche-focused retailers who develop distinctive
approaches to serve specific clientele are the antidote to Wal-Mart.
If there is an end to Wal-Mart's growth, it will come not from mass
marketers but from societal trends and the specialist retailers
that capitalize on them.
GartnerG2 Recommends
- Don't
compete via promotions and low-price specials. You'll only fall
into Wal-Mart’s trap. In fact, these tactics drive up costs
by making it harder to control inventory flow up and down the
supply chain.
- Focus
on building a culture that appeals to specific customer segments.
They may be ethnic, life-stage, emotional or needs-based, such
as consumers willing to pay for convenience and personal service—something
Wal-Mart does not do well.
- Emphasize
convenience. Consumers are increasingly time-stressed, looking
for smaller, more efficient ways to shop at stores that carry
exactly what they need and cater to them specifically.
- Use
brand to maintain margins and loyalty. The competitive retail
environment demands a unique brand platform—an end-to-end operation
focused on delivering the brand promise. Create a brand identity
and build your core business around it.
For more info
visit - www.gartnerg2.com
(top of page)
|
|
|
|
|
Advertisement: Grab the attention of the top decision makers
at retail right before RetailVision. Put a contextual ad message
in ChannelMedia where you know it will get read and for a fraction
of the price of an ad in a trade publication!
Contact keithn@telocity.com.
(top of page)
|
|
|
|
|
Wireless Carriers turn to Stealing Customers
By Shauna Smith, ARS Wireless Industry Analyst
The past few weeks
have seen a tremendous amount of press coverage on wireless voice and data service providers. This
is of no surprise, considering the major milestones that these companies have reached. Perhaps
the most significant were moves by Verizon Wireless, AT&T Wireless, and Cingular. Verizon Wireless
launched its next generation Wireless Internet Express Network, which provides customers with maximum
data speeds of up to 144Kbps, a significant increase from previously available speeds, in three key
regions of the U.S. AT&T Wireless and Cingular Wireless recently reached a network sharing agreement
that will enhance and expand both companies’ GSM/GPRS network coverage in Mid-western and Western markets,
enabling additional service options to customers in these areas. Additionally, AT&T Wireless announced
an agreement with Rogers AT&T Wireless that enables customers in the U.S. and Canada to roam seamlessly
across networks in both countries. Cingular Wireless also announced plans to implement GAIT
(GSM/ANSI-136 Interoperability Team) technology that will allow subscribers to move seamlessly between
its TDMA and GSM networks.
In a general, these translate into faster networks, increased capabilities for user and new opportunities
for service providers. But many industry experts wonder if technical advances will guarantee success.
While most major carriers have begun to roll out next generation networks, touting the benefits, several
carriers have revealed disappointing subscriber numbers for the fourth quarter. Of the major wireless
carriers in the U.S. only two reported reaching subscriber acquisition forecasts and three fell
significantly short. Overall, the wireless industry achieved less than half of its subscriber forecasts
for Q4. So the question remains, what are consumers waiting for? Will the time and money spent on
upgrading networks, establishing partnerships, and implementing new technologies really translate into
significant increases in subscribers? What should carriers do to focus on customer acquisition in the
near-term?
Fourth
Quarter Subscriber Numbers and Expectations
| Carrier |
Q4
New
Subscribers
(millions) |
Q4
Expected
Subscribers
(millions) |
% |
| AT&T
Wireless |
0.927 |
0.875-0.900 |
+6% |
| Cingular |
0.325 |
0.497 |
-53% |
| Sprint
PCS |
1.110 |
1.300 |
-17% |
| Verizon
Wireless |
0.715 |
0.752-0.900 |
-26% |
| Voice
Stream |
0.668 |
0.400-0.550 |
+40% |
The table
indicates that three major wireless players missed analysts’ expectations
for subscriber growth in the quarter. Interestingly, two carriers
who recently introduced next generation GPRS services succeeded
in meeting their targets. AT&T Wireless, which began rolling out
2.5G services in select markets in Q3, barely skirted past the
high-end of its predicted range. Additionally, VoiceStream blew
away its Q4 subscriber forecasts after announcing the nationwide
availability of its iStream wireless data service. These companies
took advantage of being pioneers, which may have helped them pick
up new customers. However, Cingular Wireless failed to meet expectations
by the largest amount, nearly 53 percent, also launched its GPRS-based
Wireless Internet Express service, though the company was clearly
a step behind AT&T Wireless.
Nearly every wireless company blamed the economy, the struggling
wireless industry, and/or sluggish holiday sales as reasons for
low revenues and missed forecasts. However, year-end subscriber
numbers for all the major carriers were positive. compared with
2000. Not surprisingly, VoiceStream saw the greatest subscriber
increase with 44 percent while Cingular experienced the least
with only 9 percent.
Year-End
2001 and 2000 Subscriber Numbers
| Carrier |
2001 Year-End
Subscribers
(millions) |
2001 Year-End
Subscribers
(millions) |
% |
| AT&T
Wireless |
18 |
14.6 |
+19% |
| Cingular |
21.6 |
19.7 |
+9% |
| Sprint
PCS |
13.6 |
9.85 |
+28% |
| Verizon
Wireless |
29.4 |
26.5 |
+10% |
| Voice
Stream |
7 |
3.9 |
+44% |
The good news
is that subscriptions are growing overall. So why in the fourth
quarter, typically the most profitable, did new customer acquisitions
fall so drastically? One reason may be the economic slowdown;
yet consumers cut back spending in general throughout the entire
year. Although wireless phone service was once a luxury, it has
become the norm in most areas. Most people still use both landline
and wireless, but more users are becoming increasingly dependent
on just their mobile phone.
Mobile phone dependency is a great for service providers. Although
churn rates remain high, customers are often just switching from
one carrier to another. However, the industry has reached a maturation
point. Retention is key, since competitive incentives are prevalent
with offers of bonus minutes, rebates, free merchandise, and other
creative offers to entice them. Capturing these “unsettled” customers
is becoming even more competitive as the base of those without
wireless service decreases. Carriers must attract both new users
and disaffected potential switchers. Marketing toward your competitor’s
customer is just as important as getting new wireless customers
signed on.
Consumers today, understand the acronyms and the differences between
competing technologies, and they know advancements are coming.
The jury is still out on what will become the next killer application
for wireless, but it appears that many consumers are waiting to
see what comes next. Last summer I walked into a Verizon Wireless
store to purchase the LG TM510 mobile phone, which was a hot product
upon its introduction. Even back then, I was told by store representatives
to wait for the CDMA2000 1x next generation version, which has
yet to arrive. Would it have been worth the wait? Most people
are likely not waiting for any one new app or feature, but rather
for a more compelling overall package.
While the economy takes some blame, it’s not why over half of
the major service providers missed their subscriber targets. An
important factor is also saturation. Several carriers say they
plan to target “untapped” market segments such as 18- to 24-year-olds
and the credit-challenged. These segments may provide some additional
revenue, but how much will these two types contribute to overall
subscription revenue? In contrast, service providers should focus
more on providing a total solution to reduce advantage existing
customer churn. Offering solid service, quality coverage, and
the latest technological will enable them to retain and acquire
the best of customers. Marketing new technology is just one part
of it. It is more a service war than a features war.
Of the four, GoAmerica offers the most features, ranging from
an email address, access to home or office email, and a personal
Web site/homepage. It must be noted, that the service used for
this study is the Go.Lite service, which offers 25 kilobytes for
use anywhere with an overage fee of $0.30 per kilobyte. GoAmerica
also offers another service for RIM devices called Go.Unlimited,
which includes unlimited usage in a local area for only $59.95
per month. Both Cingular and EarthLink wireless Internet services
are actually add ons to existing message services.
For this study, ARS focused on features available under the Internet
plans. Cingular's wireless Internet service for RIM devices featured
news alerts. It is unclear as to the usage limitations; however,
Cingular's minimum messaging plan for RIM devices, Interactive
Messaging Plus, allots 15,000 characters per month. It can be
inferred then that Internet alerts count against this character
usage. EarthLink's wireless Internet service only offers a start
page to browse WAP-enabled Web sites or to access bookmarks featuring
specific Web categories such as news or weather. EarthLink provides
its users unlimited usage nationwide. Aether Systems' offering
is similar to that of EarthLink. Like EarthLink, Aether users
are limited to WAP-enabled browsing or bookmarks; yet they are
able to access this information on a nationwide basis without
being charged extra.
Each of these carriers operate their wireless Internet application
over the Mobitex network, which delivers speeds between 8 and
9.6Kbps, which is actually slow when it comes to accessing online
information. Aether Systems is the most limited as far as applications
go, but for expanded services, such as email combined with unlimited
usage, users must pay the price. Comparing GoAmerica to EarthLink,
EarthLink charges $39.95 for wireless email, and with the addition
of Internet capabilities the cost goes up to $49.99, which turns
out to be a better deal than GoAmerica's Go.Unlimited plan at
$59.95 per month. Cingular Wireless, although competitive at $6.99
per month for wireless Internet access and $9.95 for wireless
email, cannot really compete against the likes of EarthLink, Aether
Systems, and GoAmerica, which are far more established in this
market. ARS believes Cingular's offer of wireless Internet in
conjunction with its Interactive Messaging Plus plan is a means
of "testing the water" before offering RIM's device for its GSM/GPRS
service, Wireless Internet Express.
Later on this year, Nextel will enter the competition as it recently
partnered with Motorola to develop and market a BlackBerry device
that features voice and data capabilities. It is unclear if Nextel
will design a new wireless service around the device, as this
is the first time Nextel has distributed a PDA with service. Currently
Nextel offers two wireless Web plans. Both offer unlimited nationwide
usage, but differ on features. At $5.00, Nextel's Online service
provides customers with access to home and office email as well
as news alerts via their Internet-enabled mobile phone. For an
additional $10.00, Nextel can access everything under the basic
$5.00 plan plus access to PIM functions, a personal Web site/homepage,
and access to corporate Intranets and information. Nextel's digital
network also covers approximately 236 of the 253 markets ARS follows.
As mentioned earlier, both AT&T Wireless and VoiceStream have
recently partnered with RIM to distribute a BlackBerry device
for their GSM/GPRS next generation services. According to RIM,
the new handheld device will include an earpiece and microphone
that attaches to the device enabling hands-free conversations.
VoiceStream plans to sell RIM devices with service during the
first half of this year, and AT&T Wireless has yet to announce
a date for availability. As these carriers begin to offer service
on RIM devices, competitors like Aether Systems and GoAmerica
could be overshadowed by their ability to offer high-speed data
networks.
VoiceStream's GPRS network features connection speeds of up to
56Kbps, Cingular Wireless' features speeds of up to 80Kbps, and
AT&T Wireless users may achieve speeds of up to 192Kbps. Additionally,
cost is a factor. VoiceStream's GSM/GPRS service is $2.99 per
month using a smartphone or $19.99 per month using a PDA - the
RIM BlackBerry device falls somewhere between these descriptions
- and includes 1MB of data usage per month. Cingular Wirelss'
and AT&T Wireless' GSM/GPRS services start at $14.99 and $29.99
per month for 500 kilobytes and 5MB, respectively. Each features
options such as email access, a personal Web site, news alerts,
and access to corporate Intranets and information. VoiceStream
further poses itself as a threat by having the widest coverage
of all three GSM/GPRS providers. Out of the 253 markets tracked
by ARS, VoiceStream offers next-generation service in 134 of those
markets. AT&T Wireless and Cingular Wireless are both still rolling
out their services and combined cover only 11 percent of the same
253 markets.
ARS concludes from these findings that currently there is no ultimate
competitor among wireless carriers providing wireless Internet
services on RIM devices. As mentioned previously, each carrier
is characterized by some strength and weakness in supporting RIM
BlackBerry devices for wireless Internet. For example, to establish
itself as major market competitor against Aether or GoAmerica,
a company like Cingular, although it offers a low priced RIM BlackBerry
plan, may want to expand its network coverage and marketing of
the service.
For more detail visit www.ars1.com
(top of page)
|
|
 |
|
|
New at RetailVision: Service Provider Central
From Levin Consulting and VisionEvents
Imagine a RetailVision... WITHOUT
the need to track vendors down in the hotel lobby... WITHOUT scheduling conflicts... WITHOUT canceled meetings,
and...WITHOUT competing with retailers for the vendors' time. Wake up, you're not dreaming! RetailVision has
dedicated an exhibit space just for Service Providers - the Service Provider Central, debuting this spring.
If you represent a: Distributor, Detailing Firm, Fulfillment Company, Public Relations Firm, Warranty Provider,
Training Service, Marketing Firm, National Rep Firm, Shipping/Logistics Company or Packaging Firm, then Service
Provider Central (SPC) is the exhibit area where you'll want to be. PLUS - SPC will feature the popular Passport
system, which provides additional incentives (great prizes) for product vendors to visit each service provider's
display area. AND - you will be able to participate in all the networking events RetailVision provides! Don't
hesitate to call me today with any questions or to sign up!
Barry Levin, VP, Shows, Levin Consulting
216.595.9828, ext. 107
barryl@levinconsulting.com
(top
of page)
|
|
 |
|
|
What
Can We Learn From This Year's Super Bowl?
By Steve Cross, President, The Cross Channel Group, Inc.
This may have been
the first Super Bowl where the superior team (Rams) held the ball longer, ran more plays, captured
more passing and rushing yardage, and still lost.
The Patriots won because they had a strategy, not just a goal. And they used it to derive specific
tactics, which they executed beautifully. It seemed like the Rams had a goal--to win--but no strategy
to direct them. Just like companies we all know. I have heard prospective clients say their strategy
is to dominate their niche, or to achieve $100 million in revenue, or to IPO early to raise money.
Those are goals, not strategies. A strategy is a plan developed to achieve a goal. Tactics are
generated from strategic plans.The Patriots strategy included disrupting Rams’ the passing game to
reach the goal of winning. Here’s why. The Rams receivers don’t like to get hit. The Rams also
have a precisely calibrated timing-based quick release quarterback in Kurt Warner. Patriots tactics
included hammering receivers at the line, playing them very close in the zones by overloading the
defensive backfield, and gang tackling on every completion. They executed beautifully, but strategy
won this one.
Sometimes we see companies with great tactics; terrific RetailVision presentation, great box, good
detailing program, and good MDF still fall flat on their faces and get beat by another company because
they had no strategy. Frequently, these companies have mixed up goals with strategy, or tactics.
PS: I sure hope the commercials are funnier next year. Bring back the guy with money coming out of
his Wazoo. That was a funny commercial.
Steve Cross works with mid-sized high tech companies to evolve
their businesses. Since 1997, his clients have included Pinnacle
Systems, Visioneer, Dazzle, Network ICE, Margi, Aladdin, Outpost.com.
He was sales vice president at Connectix. Contact: steve@crosschannel.com
408-528-7211.
(top of page)
|
|
|
