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1. Best Buy Follow-up. According to a spokesman, the retailer
is testing 3 different models of its new "house" Matrix VPR (value,
performance and reliability) line of PC's in 11 of its stores.
Its rationale: "To test a new kind of business model for PC retailing.
Our goal is to better respond to changing consumer demands in
a cost-effective manner. With VPR Matrix, Best Buy can bring the
latest technical innovations to market much more quickly than
through traditional methods. Moreover, these additions to our
PC assortment meet the high expectations of Best Buy customers
by featuring the most powerful components from established industry
leaders and are well-positioned to be conveniently supported by
Best Buy technical services. "That sounds good but most things
aren't as sensible as they often sound and I stand by my initial
assessment that Best Buy is in its market leadership position
because its willing to take chances and act like a leader. However,
this "trial" is a huge longshot for success, and I'm being kind.
2. Internet merchants made more than $10B in sales during the
final quarter of 2001, an increase of 13.1 percent over the same
period in the previous year, according to figures released today
by the U.S. Commerce Department's Census Bureau. The numbers show
that for the second quarter in a row, e-commerce sales have outgrown
traditional retail sales. Total retail sales were an estimated
$861 billion, a 5.3 percent increase from the same period a year
ago, the commerce Department said. Fourth quarter 2001 e-commerce
sales rose an estimated 34 percent from the third quarter 2001,
while total retail sales rose just 9.5 percent from the prior
quarter. Total e-commerce sales for 2001 were an estimated $32.6
billion, an increase of more than 19 percent from 2000. Total
retail sales in 2001 increased 3.3 percent from 2000. E-retail
sales made up exactly 1 percent of total sales in 2001, a 0.1
percent increase over total sales in the previous year. Commerce
Department's data are online at: http://www.census.gov/mrts/www/current.html
3. Contender or Pretender? Consider the following tasty tidbits
out of a recent Washington Post item on Circuit City. In 1991
Circuit's sales were 3x those of Best Buy, $2.37 billion vs. $665
million. In the first 10 months of the current fiscal year, Best
Buy's sales totaled $16.5 billion, Circuit City's $8 billion.
(That's in 3 years! What went wrong? Please someone tell me.)
In my humble opinion the company is in the midst of a long overdue
revamp of just about everything: changing its merchandise mix,
revamping its approach to advertising, striving to improve its
reputation for customer service and searching for the right layout
for its stores (goodbye big red everywhere, hello hardwood.).
Is anything working? Sales of consumer electronics in stores open
at least a year have fallen every quarter from year-earlier levels.
That string may be about to break, however. Sales were up 6 percent
in November and 10 percent in December, the most recent month
reported. Circuit City Stores Inc. President W. Alan McCollough,
"What we learned for sure is that success at retail can be fleeting,
and victory is not permanent." The company has stepped up training
of its floor sales team, revamped its sales commission policy
to remove pressure to promote particular brands. These are good
steps indeed but do you think they can catch BestBuy or more likely
to be surpassed by GoodGuys? We shall see. (http://www.washtech.com/news/software/15214-1.html).
4. BrandsMart USA is getting a little boasty in its "old" age.
As the company recently opened its fifth store in West Palm Beach
the venerable force of Fla. delivered the following proclamation
on its web site: How have we continued to be the lowest price
retailer in South Florida in consumer electronics and appliances?
It's simple. We do this by outselling our competition by as much
as 15 times per selling location. In fact, BrandsMart USA leads
the United States in retail categories such as sales per square
foot and sales per store. With sales per store in excess of $125
million per location, competitors just can't contend with our
economy-of-scale. This equates to a reduction in overhead that
we use to reduce our prices. This means that the big winner is
YOU!
5. Buy.com, The Magazine. That's right, If you can't make money
selling product, try selling ads? Buy.com is launching a "free
to customers" magazine that will promote products found on its
Web site. Buy.com Magazine will be published quarterly and will
include editorial features. Buy.com stated that the magazine is
a "first in the e-tailing industry," and will change the way retailers
communicate with customers. The publication features layouts of
apparel and jewelry that can be bought from the site. The quarterly
magazine also includes articles about fashion, celebrities and
dating, and gives quizzes and beauty tips. The company said it
has lined up a group of investors that includes Visa, Cingular
and NEC-Mitsubishi. Given this is an area I know something about,
I do not believe this venture will be as profitable as it may
appear. Buy is attempting to replace or reduce the cost and
clutter of Sunday circulars and ROP ads in USA Today with a
"controlled" publication. However, as a quarterly that mails
to its own database of customers, it will be hard for them to
deliver timely product information and latest price information.
Moreover, you will need more than a handful of advertisers to
make this a profitable venture. That said, best of luck.
6. A worldwide shortage of motherglass, a key component in making
LCDs, is likely to lead to a price increase of PCs, PDAs and other
devices, according to Provizio, a market research firm. The shortage
could last for another year and was brought on by higher than
expected demand for these products.
7. Despite a decline in revenue, IBM actually increased its market
leadership from 25 percent to 29 percent in server market share
in 2001, gaining at the expense of Sun Microsystems, Hewlett-Packard
and Compaq. IBM may have also benefited from its ability to run
the Linux OS. IBM's server revenue decreased from $13.9 billion
in 2000 to $13.6 billion in 2001, according to figures from Gartner.
However, the overall market for servers was down 15 percent, from
$55.6 billion to $47 billion. The market decline is attributed
to general economic slump and overcapacity of IT products.
8. The new iMacs Are Fastest-Selling Computers in the Amazon.com
Computer Store The highly-anticipated new Apple iMac desktop debuted
on Amazon's PC store last month but in less than four hours of
availability, the entire first shipment of iMacs were purchased,
making it the fastest-selling computer in the Amazon.com Computer
store history. Amazon were out of inventory when we last looked.
Apple laptop and desktop systems currently claim 10 of the top
25 bestseller spots in the PC store.
9. Follow-Up: GameStop IPO -On February 19, 2002, the company
successfully completed an initial public offering for its GameStop
subsidiary, raising $250.0 million in cash for Barnes & Noble,
Inc. and $52.4 million in net proceeds for GameStop. On a fully
diluted basis, Barnes & Noble has retained an approximate 60.0
percent interest in GameStop.
10. Spike Lee is directing the new K-Mart TV ad spots. The ads,
which were directed by SpikeLee, focus on establishing Kmart as
"The Store That Understands What Really Matters in Life." This
differentiating positioning is supported by Kmart's existing assets
-- exclusive brands, value and convenience all under one roof.
After Martha Stewart and Jackie Smith it just seemed like such
an obvious decision.
This column is dedicated to the memory of Daniel Pearl, The Wall
Street Journal reporter who was executed by terrorists while doing
his job: Writing stories so we can all benefit from his research,
information and insight. With all of the media bashing that goes
on, and much of it deserved, it's an objective person's obligation
to remember the great value we are all afforded by the Fourth
Estate.
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Does
the OPSS Industry Need an S.O.S.?
By Todd Smith, ARS Channels Analyst
This
week Office Depot reported a fourth-quarter profit with a net
income of $40.3 million, compared with a year-earlier loss of
$168.3 million. Staples will report the full results of its fourth
quarter and fiscal year 2001 on March 5th, 2002. Despite Office
Depot's positive fourth-quarter earnings, the Office Product Superstore
arena (OPSS) went through a turbulent 2001 as it witnessed slow
sales growth when U.S. companies slashed jobs in the Small-to-Medium-size
(SMB) business market. SMB office supply purchases are the financial
pillar for any OPSS. Job cuts directly impacted demand for such
business necessities as office desks, PCs, and peripherals. Staples
predicts a fourth quarter sales shortfall that relates to the
company's strategic decision to forego less profitable sales of
computers and some electronics during the holiday season; but
contrary to other office supply retailers, price did not factor
into the shortfall during the holidays.
According to the ARS Price Comparison Chart for December 2001
(below), Staples was the most price competitive in the Office
Supply Superstore category with prices 3.6 percent below average
among averages for 14 different IT and computer-related products.
Staples' low holiday prices didn't generate enough sales to keep
it from posting losses with over 30 store closings and severance
charges in the fourth quarter. Office Depot finished closely with
prices 2.7 percent below average. During one of the most pivotal
fourth quarters, Office Depot's sales fell 8 percent while same-store
sales declined 3 percent. The retailer performed poorly despite
aggressive prices compared to all retailers and within the OPSS
arena. OfficeMax came in a distant third with prices 0.9 percent
below average.
In the face of store closings, Staples' biggest competitor, Office
Depot, expects to open 25 to 30 new retail stores in North America
this year, down from the 45 to 50 originally forecasted. Opening
this many new locations after an economic downturn will make Office
Depot that much more attentive to its price positioning to lure
foot traffic into the store. Office Depot also just announced
plans for a direct-mail management application on their Web site
that enables businesses to send targeted direct mail pieces such
as letters, postcards, or flyers at the click of a mouse. The
new service could help the retailer regain the SMB market that
dropped off during the second half of last year. Office Depot
was profitable during the fourth quarter thanks to cost savings,
improved marketing, and a sharper focus on customer service. Focusing
on those core competencies helped offset the impact of the sluggish
economy. The leaner Staples store count will not only help the
retailer stay competitive, but the store closures will also act
as an ongoing exercise to examine under-performing stores. The
consolidation trend should allow consumer demand in the OPSS space
catch back up to capacity.
OfficeMax is turning to a new marketing campaign to help turn
2002 around. Last week, the OPSS launched a national branding
campaign designed to introduce its new value proposition, "Max
Means More." The new campaign positions OfficeMax as an OPSS that
empowers small businesses with tools needed in today's hyper-competitive
business environment. Again, the retailer is embracing its core
customer segment, trying to regain lost sales. Despite each retailer
suffering from similar ailments, their approach to recovery has
taken different routes. Although sales remain weak in business
furniture and in PC/IT categories, the trend has bottomed out
and same-store sales are in a position to increase. Same-store
customer traffic remained positive in Q4, suggesting that overall
same- store sales should eventually turn positive once pressure
on average product prices decreases—a phenomenon that will be
consistent with economic rebound. Since OPSS price points appear
competitive in the OPSS and general retail arena, players should
now focus on solid initiatives to add value to their customer
segments in order to increase same-store sales for the next year.
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Returns.Your
Best Selling Opportunity
By Scott Reedy
All
of us have heard about those websites that have bad customer service
stories. Usually about returns. Of course these folks represent
some of the fringe element, but there is an underpinning of an
issue here: these retailers view Returns as a burden, not an opportunity.
True customer service is an attitude, not just an action. It is
not accepting a return, but how you do it. It is treating the
customer like a person, not a problem. Returns can be a selling
opportunity. Let me show you what I mean. Joel Davis, an ex-Ingram
Micro Director among other things, has a website called MyToolWorks.com,
which offers business templates and tools. He offers a money-back
guarantee. Not to long ago a customer sent an email wanting his
money back on a template that didn't meet his needs. Joel called
the customer back almost immediately. He had already refunded
the money and apologized that the tool did not meet his expectation.
The customer was overwhelmed by the fact that someone actually
called him instead of sending him an impersonal email. They ended
up having a very good conversation. This customer has since gone
on to become a continuing customer, and likely, has told others
about it. And that's the key - you tell two friends, and so on,
and so on.
Not long ago I had to buy a new cell phone and service. I went
to the Sprint Store down the street. I bought the phone and service.
Only the cell number they pre-assigned me was awful and hard to
remember. The sales rep said he would look into it. Right, I thought.
I was already thinking about returning the phone later that day.
My new cell phone rang an hour later. The sales rep said he had
tracked down a few numbers and put them on hold for me. He had
actually called in and requested several numbers be put on hold
for me. One of them was pretty good. We went through the procedure
and I had an easy to remember number in five minutes. The sales
rep made sure I was happy with the number and apologized for inconvenience.
I have been a Sprint customer for a few years and will remain
as such based on this level of service. View returns as an opportunity
to create customer loyalty and you will benefit. Returns represent
so much an opportunity that I believe that a percentage of the
marketing expenditure should be allocated to it. The customer
should not only be allowed to return the item, but, if at all
possible, they should be contacted after to make sure they are
happy with your products or service. Maybe even send them a gift
certificate or personalized letter. This can turn a "return" into
a "return to buy".
Scott Reedy is an Independent Channel Consultant. With over 15
years in the computer channel, he has had tenure at several companies
including Apple Computer, Ingram Micro, Multiple Zones, and Onsale
/ Egghead.com.
Contact: scottreedy@hotmail.com
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Brandsmart,
BestBuy, GameStop, Federated, PCMall, and more...
By Shauna Smith, ARS Wireless Industry Analyst
Best
Buy's Richard Schulze is handing over CEO responsibilities to
Brad Anderson effective June 30. Schulze has agreed to remain
as an active chairman of the board. He continues to be responsible
for presiding at board meetings, participating in strategic business
development, fostering the Company's culture through the development
of future leadership, and representing the Company as required.
Schulze said, "This decision enables me to direct more of my daily
energy to personal interests, while ensuring that the Company
I founded 35 years ago remains as vigorous in the future as it
is today. I am highly confident that the Company's record of top-quartile
achievement will continue under the leadership of Brad Anderson
and our talented management team." Schulze added, "Brad's insights
have been invaluable to me over the past 29 years. He has proven
that he has both the vision and the leadership to propel the Company
forward into a new decade of growth." The Company also announced
the promotion of Allen U. Lenzmeier to president and chief operating
officer, and the promotion of Michael P. Keskey to president of
Best Buy Stores, effective on March 3. "Allen brings to his new
position incredibly strong leadership and organizational skills,"
Schulze said. "He will be critical to ensuring that we leverage
Best Buy's people, financial resources and structural capital
to accelerate the integration and performance of our businesses."
Keskey, 47, executive vice president of retail sales at Best Buy
Stores, was promoted to president of Best Buy Stores, succeeding
Lenzmeier. In his new role, Keskey is expected to continue to
expand Best Buy's presence throughout the U.S. and extend the
Company's lead as the Country's most preferred place to shop for
new technology and entertainment products and services. Keskey,
who has been employed with Best Buy for more than 13 years, reports
to Lenzmeier.
PC Mall has tapped Pete Freix as Senior Vice President of Business
Development Sales. This is a new position at the direct marketer
and concentration on building its Outbound sales divisions. Freix
will be responsible for PC Mall's California Outbound telemarketing
operations. He will report to Kris Rogers, Executive Vice President
of Enterprise Sales. Frank Khulusi, PC Mall CEO, said, Freix comes
to PC Mall with over 18 years' experience in sales, marketing
and operations in the retail and SMB markets. Most recently, Freix
was CEO of a successful start-up. Prior to that, Freix was a director
of sales for Dell. While at Dell, Freix was responsible for a
multibillion-dollar sales division with over 1,000 employees.
Office Depot appointed Brenda J. Gaines, President of Diners Club
North America, and Bruce Gordon, President of the Retail Markets
Group for Verizon Communications, to its Board of Directors.
Barnes & Noble for the year ended Feb. 2, 2002, sales were $3.4
billion, an increase of 6.0 percent. On a comparable basis, sales
increased 4.5 percent for the fourth quarter and 2.7 percent for
the year. Based on the greater-than-anticipated bookstore fourth-quarter
sales, the company expects to earn $1.70 per share for the retail
segment (which includes GameStop) in fiscal 2001 (prior to a $4.5
million charge for the settlement of a lawsuit).
Salomon Smith Barney raised its investment rating on Web design
software maker Macromedia to "buy" from "neutral" Analyst Jonathan
Rosenzweig raised his price target to $17 from $15. In a research
note, he noted Macromedia shares have plunged in recent weeks
and are now just 18 percent above the 52-week low. He said the
company will soon be shipping new products, which should help
revenues. "Macromedia is on the cusp of a significant product
upgrade cycle," Rosenzweig wrote. "With the Flash 6 player already
available, it seems that Flash 6.0 will be the first of several
new product releases and upgrades."
The Wiz has started offering free shipping on all DVD, Digital
Cameras, PocketPC's, handhelds and MP3 Players.
Universal Games, a subsidiary of Vivendi Universal, will release
"Jurassic Park: Project Genesis," a world-building game, in the
fourth quarter of 2002. The PC and Xbox game will allow users
to create and manage their own dinosaur theme park, similar to
games like "SimCity."
Fargo Electronics reported record net sales of $60,963,000 for
the year ended December 31, 2001, an increase of five percent
from annual sales of $57,845,000 in 2000. Net income for 2001
was $4,076,000, a 51 percent increase from $2,707,000 in 2000.
Net income for 2001 includes charges of $1,434,000 (or eight cents
per common share) for legal, professional, and investment banking
expense solely related to the previously announced and pending
acquisition of Fargo by Zebra Technologies.
Good Guys has been selected to receive one of the first shipments
of Mitsubishi's newest integrated HDTV projection Diamond Series(TM)
televisions. The 65-inch rear-projection television, which features
a built-in HDTV receiver and the NetCommand system, will be featured
at all 72 Good Guys locations beginning in early March. "Mitsubishi's
fourth-generation HDTV was created to be the command center of
a digital home network, allowing customers to control both selected
analog and digital products with an easy-to-use, on-screen system
and delivering exceptional style and performance," said Max Wasinger,
senior vice president of sales and marketing, Mitsubishi Digital
Electronics America.
The Business Development Group (BDG) of Wayzata, Minnesota announced
today, through its investment subsidiary, Business Development
Group Acquisitions, Inc. (BDGA), has signed a non-binding letter
of intent with Federated Department Stores, Inc. of Cincinnati,
OH - the preliminary step that eventually could lead to BDG's
purchase of Federated's $1.2 Billion Fingerhut subsidiary and
substantially all of Fingerhut's assets.
Fingerhut, founded in 1948, is the sixth largest direct marketing
company in the US, with over 10 million customers nationwide.
The company employs up to 7,000 people and is comprised of over
35 different catalogs, including Fingerhut, Old Pueblo Trader,
Figi's, Bedford Fair, Brownstone, Lew Magrum, and Cowards Shoes.
Fingerhut is the largest commercial customer of the US Postal
Service and for the most recent holiday season, was listed by
the Nielsen net as the nation's second largest e-commerce retailer.
The potential transaction is subject to additional due diligence
by BDG, as well as finalization of BDG's financing package to
complete the purchase. Under terms of the agreement, BDG must
notify Federated of its intent and ability to proceed in early
March. At that point a definitive purchase agreement could be
consummated between BDG and Federated. BDG's financial advisor
on the transaction is Alterity Partners, New York, New York.
"We remain positive about our ability to complete this transaction,"
said Peter Lytle, Managing Partner, Business Development Group.
"We'd like to thank Federated for working so diligently with us
in a relationship that has been both cooperative and expeditious."
The purchase of Fingerhut as a viable and going concern remains
BDG's top priority and, BDG has been moving as quickly as possible
to get this transaction completed. Federated Department Stores
is one of the nation's leading department store retailers, with
annual sales exceeding $15.5 Billion. Additionally, Federated
Department Stores said that CEO Jeffrey Sherman has resigned effective
March 1 to accept a position with Limited Stores. Following Sherman's
departure, corporate responsibilities for the Fingerhut component
of Federated Direct will be assumed by Federated Vice Chairman
Ronald W. Tysoe. Michael Sherman, Fingerhut president, will report
directly to Tysoe, and along with Steven A. Lightman, executive
vice president of Fingerhut catalog operations, will maintain
responsibility for Fingerhut's ongoing operations.
PerformanceRetail, a provider of Web-based software applications
and business management services for the convenience retail store
industry has raised $25 million in its Series B round of funding.
Venrock Associates and U.S. Venture Partners co-led the round,
which also included Granite Global Ventures.
Adobe Systems announced the release of Adobe® Photoshop®
7.0. "Photoshop 7.0 does a beautiful job of building on the advances
of previous versions to make 7.0 the most powerful, most amazing,
and most useful release of Photoshop ever," said Scott Kelby,
president of the National Association of Photoshop Professionals.
"The new Healing Brush may be the single coolest tool in Photoshop
ever, and when you use it, all you can do is shake your head and
say, 'How in the world does it do that?' It's that cool."
All your computer files, in your pocket. The Pockey Portable Drive
is small enough to fit in your shirt pocket, plugs into (and is
powered by) your computer's USB port and delivers more capacity
for the money than any other similar device. Up to 20 GB of storage,
at a cost that's far less than other devices!
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ARS
Study Reviews Impact of RIM Devices on Wireless Internet Market
By Suzzana Ellyn, ARS Wireless Data Research Analyst
Over
the past several months, Research In Motion (RIM) has negotiatied
nationwide agreements with Nextel, for its packet data network
and AT&T Wireless and VoiceStream, for their GSM/GPRS network.
RIM now plans to distribute a BlackBerry compatible voice and
data device. A recent study by ARS, Inc. compares current wireless
providers featuring BlackBerry 950 and/ or 957 devices. ARS found
four major wireless carriers: Aether Systems, GoAmerica, EarthLink,
and Cingular Wireless offering BlackBerry with wireless Internet
service. There is no clear winner. Various strengths and weaknesses
emerge among each provider and overall competitiveness really
depends on each customer's scope of use.
The study, however, confirms BlackBerry has established a niche
in the wireless market and will make a major impact going forward.
The average price for BlackBerry's wireless Internet service over
the last three months was $10.85. At $14.95 per month, Aether
Systems is the highest priced and over 27 percent above the average.
At $9.95 per month, both GoAmerica and EarthLink fall nine percent
under the average. At $6.99 a month, Cingular Wireless is the
lowest by over 55 percent.
As for service availability, out of the 253 markets followed by
ARS, Earthlink offers coverage in 98 percent. GoAmerica, however,
is not far behind with 95 percent. Aether covers 200, or nearly
80 percent. Cingular, interestingly, offers the lowest amount
of coverage at about 160 markets. However, Cingular Wireless has
grown its market coverage by 16 percent since August 2001.
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.A major threat to all four carriers is Nextel. Nextel
not only offers competitively priced plans, but also has a significant
digital wireless network in place. Even more threatening is Nextel's
reputation within the mobile enterprise market. Nextel's digital
services have been developed and marketed with mobile professionals
in mind. As consumers grow to understand the benefits of high-speed
wireless, AT&T Wireless along with VoiceStream and possibly Cingular
are positioning themselves to overtake other wireless Internet
service providers that support BlackBerry devices. One thing is
clear, as consumers demand better form and functionality, wireless
carriers are looking toward BlackBerry to meet those demands.
Through technology, flexibility, and early strategic relationships,
RIM is positioning its BlackBerry devices as the handhelds-of-choice
for the next generation of wireless communications.
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What's
Changing?
By Steve Cross, President, The Cross Channel Group, Inc.
Channels
are changing and evolving. The best will anticipate and lead change.
The rest will try to implement and keep up. In the old days (1988
or 1990), a good senior channel sales and marketing person understood
the retail channel. That is mostly all there was to understand.
Now, if that is all you know, I suggest you find a new line of
work. Just to survive you must understand and work with retail,
etail, catalogs, direct marketing (mail), email marketing (not
spam), Internet marketing, and e-commerce, and you had better
know how to do business in international markets.
A friend of mine has a deep understanding of the evolution of
channels. He uses email marketing to create revenue for clients.
Right now, he's dumping about 2.5 million pieces daily to people
who have signed up to receive emails. He maintains his own lists
and works with a network of direct marketers who control lists
that total over 50 million names. His techniques are advanced,
with all sorts of proprietary software for testing, tracking,
and determining effectiveness, all in real time. That's a new
channel, folks; a channel with no MDF, no soft dollars, and no
end-caps. At last, a channel we can all love.
Recently, I was introduced to a company that does almost 40% of
their business outside the US. They blew me away. This wasn't
a Hewlett Packard or IBM, either. Just a mid-size, privately held
US company doing about $20 million a year, profitably. An impressive
accomplishment and they take it for granted that to succeed they
MUST master domestic and international markets. Another friend
works for a software company that does about 70% of its business
in the channel. Plain, old, shrink-wrapped software sold the old-fashioned
way. The other 30% of the company's revenue is from selling their
own products and third-party products to their base of users.
Funny thing, they sell as much third-party stuff as their own
stuff. Cost on this process is nominal. Most of the products sold
are virtual, but they work with a big fulfillment house when somebody
wants a CD and printed manuals.
These are just 3 examples of new channel leaders. Successful,
innovative people and companies. If you know some more examples,
please email them over. I'm collecting stories like this for my
book. Thanks.
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 formerly sales vice president at Connectix.
Contact: steve@crosschannel.com
408-528-7211
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Know
Your Audience: The Key to Effective Marketing
By Robert Gelphman
The
very nature of high technology is to add functionality while lowering
price. No other industry increases value while decreasing its
cost to the consumer. More for less. Just look in the newspapers.
That portable computer you bought last week is cheaper this week.
Maybe you should not look. The personal computer and personal
communications industry is commoditizing so fast that price is
becoming the only purchase issue. Therefore, the essential element
of any marketing program becomes one of segmenting and dissecting
your key or core audiences. In essence, knowing your audience
is everything.
Accurate definition of an organization's key audience is more
critical than ever, especially in the current economic climate.
The core customer must be continuously evaluated and re-evaluated
throughout the life of the organization. Many consumer products
companies assume that their product will appeal to a mass audience
and conduct marketing campaigns accordingly. They do not segment
the market and develop products or strategies that appeal to each
one individually. But there is no general public. There are only
specific audiences each with their own ways of receiving and processing
information. Their purchase decisions are different and their
product satisfaction demands are different. Let us examine the
personal computer audience. The end customer generally comes in
three flavors. The first, considered an early adopter, is looking
for performance and innovation. Biggest, fastest and baddest are
turn ons. These people are well informed and will probably tell
your sales staff more about your product than you can tell them.
They are a great source of information regarding features, benefits
and most importantly the competition.
They are either have or are in pursuit of every gizmo and gadget
known to man. They have their own version of the 21st century
information worker's tool belt consisting of pager, cell phone,
information assistant and portable computer. And they know how
to use each and every feature and button. Online is a preferred
means of gathering information and purchase as these consumers
can customize their order in real time, thus accelerating delivery.
They consider "sales consultants" bothersome and uninformed. They
do not need the hand holding are willing to forego nuisance bugs
and breakdowns. They just want to be first on their block.
This audience's information sources are very select and few in
number. Branding is unimportant and features are everything, unless
the brand stands for new and innovative. They like the ability
to program and do things whether there is any utilitarian value
or not. These people get their information from test and comparison
reviews in highly regarded trade publications and web sites. Since
they are not casual shoppers, they will not be inspired by in-store
spiffs or end aisle promotions. In fact, if they even get a whiff
of a hint that you are marketing to a mass audience, they will
be turned off, as the allure will have faded. The bloom is off
the rose as they say. This group is sometimes more interested
in a product's newness than its usefulness.
The second group is a larger group, generally of high income and
education and professional stature and will use a variety of resources
to gather information. They will evaluate information carefully
until they get to a point where they are tired of thinking about
it and will just make a decision. In-store promotions may work
but only if they are predisposed toward a purchase. Utilitarian
value is very important. There must be a clearly defined features-to-benefit
ratio. Stress battery life. In-store demonstrations that allow
for real world practice such as retrieving their own email will
help close a sale. They are increasingly likely to purchase online,
but primarily of those items, they are very familiar with or are
replacements. They will not buy the first handheld online, but
they might buy the second, upgraded one this way. The first purchase
requires a kicking of the tires. These people can be your best
and worst customer. They are informed and can afford the higher
end of a product line. They think they know, will ask lots of
questions, will not suffer foolish sales assistants gladly, and
will complain long and hard if something goes wrong. If angry,
they will tell everyone. At the same time, if happy, they will
be your strongest advocates.
These people have used PCs before and generally have some type
of handheld computing device, cell phone and/or pager. Smaller
is better. Their second PC is a notebook and is likely to be the
primary computing machine. Everyone in the household over the
age of five probably has a computer. Everyone over age 12 has
a cell phone. The kids are generally a good source of information
regarding all things computer. This type of customer will be loyal
to a brand but they are not susceptible to emotional pitches.
They need and demand information. If the brand fails even once,
you probably have lost them. The last group is that which is buying
a computer because everyone has one, they are fascinated with
this thing called the Internet and want to surf the Web because
everyone else is. They do not know brand other than WinTel. They
will not buy an Apple computer as their first purchase because
they have been told that Windows compatibility is paramount, though
they do not know why. If you tell them that Apple actually was
the first to offer "windows" capability, they will be confused
and prefer not to discuss the subject further.
Ease of use and price are THE sales ingredients. Brand is important
because of name recognition only. They do not actually attach
any logical or emotional meaning to the brand, as they are not
computer sophisticates. Megahertz has meaning only in the context
that bigger must be better. They think they need a one-gigahertz
computer because online access will be faster. If you tell them,
it actually has nothing to do with it, they will tell you "but
that is what they told us at the store." AOL and the Internet
are synonymous. The best source of information is their friends,
who may or may not be computer literate themselves. If their friends
bought from Dell, they will buy from Dell. The Jones' have significant
input in their lives. Since price is everything, in-store promotions,
end of aisle displays, coupons in a newspaper and rebates work
well. They are not likely to read PC magazines and may think professional
wrestling is real. They are also Oakland Raider fans. Where they
buy is just as important as what they buy. If a well-known brand
is for sale at Target or Costco; they are more likely to buy there,
as they are perceived as cheaper than at a computer or electronic
specialty store.
As you can see, not all audiences are created equal. Each audience
has specific needs, tastes and information processing capabilities.
Even within these categories, the smart marketing company will
be more successful with a continued refinement of their audience.
Most importantly, which audience do you want as your customer?
For comments or questions, please contact 408/451-8420 or robert@gelphman.com,
www.gelphman.com.
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