Netflix made news this week for announcing new pricing strategies aimed at incenting (not incentivizing- which is not a word) customers who don't use DVDs to migrate to the firm's streaming service.
It's a bold move, but may mitigate the ongoing criticisms of the firm's financials by CNBC analyst Herb Greenberg. He's complained about the way Netflix accounts for the costs of their content deals. This new pricing approach may moot those complaints.
I received an email a few days ago informing me that my combined 2 DVDs/month + free streaming plan was discontinued, effective September. Instead, my formerly $15/month service would be replaced by two separate plans, the total price for which is $20/month.
Various business media have reported a customer uproar over this move. I confess to not being entirely sure why. Well, I mean, yes, I understand no customer writes to a service provider to say thanks for a price increase.
But, that said, it's not a big deal. In my case, I simply went online this morning and cut my DVD plan to 1/month, returning my monthly fee to what it was before, give or take a few pennies. Fact is, I want the ability to order DVDs, but rarely use them. The first two discs for the HBO series Rome have lain on my living room floor for about four months now, unwatched. But as some pundits have noted, the Netflix instant streaming library of movies is still pretty spare.
However, for the under-30 set, who watch a lot of television series seasons via Netflix streaming, this plan will allow the firm to better-control its physical distribution costs while separating streaming and teaching customers to pay for it, rather than expect it as a free luxury with the DVD service.
As an equity portfolio investment, Netflix's move will probably draw fire from analysts and lose some value initially as a result of the pricing moves. In my own portfolios, it shows a not-too surprising $10 drop by mid-Thursday (when I am writing this) on a roughly $300 stock price at the day's open. Never the less, the issue is up 25% since early May- not too shabby, with the S&P negative by almost 2% over the same period.
Yesterday's Wall Street Journal carried a piece arguing that Netflix's new pricing structures, which will push more users to streaming, will eventually create so much more bandwidth demand as to push internet access providers to price said access into basic and higher-usage components.
As I wrote in a post several months ago regarding my equity portfolios' recent holdings, most are pretty robust and less-vulnerable to recent economic shocks. I believe Netflix continues to be.
After all, what might look like a 25% increase in service price to me was still only $5/month. Less than $100/year. And my reaction was what Netflix probably wanted- the same revenue at lower costs to serve.
Meanwhile, most younger users are now paying $8/month for streaming-only, which is minimal and, I think, less than the prior lowest-cost plan.
One of the aspects of Netflix's business which I admire is how inexpensive it is for what it offers. In an era of $10 movie tickets as the local dump of an art house theatre, $55/month cable television bills for a basic bundle, having online streaming of Netflix offerings to any device is a bargain.
A few bucks a month, more or less, won't change that anytime soon.
Showing posts with label Internet. Show all posts
Showing posts with label Internet. Show all posts
Friday, July 15, 2011
Friday, May 27, 2011
Is There A Social Networking Business Bubble Forming?
What to make of the uproar over LinkedIn's IPO valuation? I haven't kept abreast of all the details, but I'm aware that the value of the IPO soared, then fell.
The nearby chart displays the first few days of the firm's equity prices. Suffice to say, overall, lucky buyers of the issue have enjoyed a handsome return in just the first five days.
Of course, there are all manner of opinions on LinkedIn's prospects.
For example, some co-anchors on Bloomberg did the math and contended that the newly-public firm would need to grow at a rate of some 50% per year for the next two years to justify its price/sales ratio.
Others have noted how slim the actual base of publicly-offered shares is, how dilutitive employees' options will be, and how much volume could be dumped by underwriters at the first chance to do so.
Regardless, the feeding frenzy by other social networking-based companies is now afoot. Zynga has plans to go public in June. Margaret Brennan of Bloomberg quizzed an analyst about how serious one should take Zynga's revenues, where real money is spent to buy cyber items in virtual worlds.
Point taken.
Take a big step back and ask yourself, just what is the nature of these firms? What are they selling, and how competitively defensible is it?
LinkedIn sells recruiters and HR people access to business professionals. I believe there is some other membership upgrade, as well as the ubiquitous online advertising play. So LinkedIn actually has something to sell, but as for how much growth there is, well, it's not exactly Facebook.
Zynga seems to be mostly an online gaming site. It's unclear how much long term value that site really has. Thus, I suppose, the great dispatch with which the founder is planning an IPO.
One of the social networking site founder wunderkinds was on one of the business cable channels expounding on how all sites wishing to gain or retain allure need to add a group or social aspect to their offerings. That is precisely the sort of sentiment that got the original internet-based technology bubble off to its start.
Recall, if you will, that suddenly clicks outshone bricks, and online companies marketing everything from business supplies to pet items soared.
Let's assume their is some value in social networking aspects of some online behavior. How much of it is truly defensible from a business sense? As I wrote in this post concerning Groupon, the barriers to entry in some of these product/markets are much lower than you might initially believe.
A while later, I wrote this post reinforcing my earlier impressions,
"Groupon and its ilk just aren't businesses which I see as capable of delivering long term consistently superior shareholder returns, when they are public. There seem too few barriers to entry, too little in the way of proprietary, defensible competitive advantages, and an evolving sense by many customers, i.e., retail merchants, that what these services provide is, in the end, not really all that different than conventional couponing, and not necessarily loyal, full-price customers, either."
I've yet to actually see a firm which has begun with a social networking application, other than Facebook, a first-mover, which doesn't seem to be fairly defenseless and vunerable. On the other hand, it's much easier for an Amazon or Apple to add social networking, links to Facebook, or what have you, to their existing, robust business model. In that sense, my equity strategy process is thus already in a position to own social networking assets with relatively lower risk than chasing after Zynga or LinkedIn.
It's hard not to see a bubble forming in this online social networking space. The fundamentals are pretty much in place- hot user acceptance, more eager retail investors than companies and shares to buy, and a still-recovering IPO market.
But, investment bubbles being what they are, we'll probably be observing this one in hindsight sometime next year, or the year after.
Of course, there are all manner of opinions on LinkedIn's prospects.
For example, some co-anchors on Bloomberg did the math and contended that the newly-public firm would need to grow at a rate of some 50% per year for the next two years to justify its price/sales ratio.
Others have noted how slim the actual base of publicly-offered shares is, how dilutitive employees' options will be, and how much volume could be dumped by underwriters at the first chance to do so.
Regardless, the feeding frenzy by other social networking-based companies is now afoot. Zynga has plans to go public in June. Margaret Brennan of Bloomberg quizzed an analyst about how serious one should take Zynga's revenues, where real money is spent to buy cyber items in virtual worlds.
Point taken.
Take a big step back and ask yourself, just what is the nature of these firms? What are they selling, and how competitively defensible is it?
LinkedIn sells recruiters and HR people access to business professionals. I believe there is some other membership upgrade, as well as the ubiquitous online advertising play. So LinkedIn actually has something to sell, but as for how much growth there is, well, it's not exactly Facebook.
Zynga seems to be mostly an online gaming site. It's unclear how much long term value that site really has. Thus, I suppose, the great dispatch with which the founder is planning an IPO.
One of the social networking site founder wunderkinds was on one of the business cable channels expounding on how all sites wishing to gain or retain allure need to add a group or social aspect to their offerings. That is precisely the sort of sentiment that got the original internet-based technology bubble off to its start.
Recall, if you will, that suddenly clicks outshone bricks, and online companies marketing everything from business supplies to pet items soared.
Let's assume their is some value in social networking aspects of some online behavior. How much of it is truly defensible from a business sense? As I wrote in this post concerning Groupon, the barriers to entry in some of these product/markets are much lower than you might initially believe.
A while later, I wrote this post reinforcing my earlier impressions,
"Groupon and its ilk just aren't businesses which I see as capable of delivering long term consistently superior shareholder returns, when they are public. There seem too few barriers to entry, too little in the way of proprietary, defensible competitive advantages, and an evolving sense by many customers, i.e., retail merchants, that what these services provide is, in the end, not really all that different than conventional couponing, and not necessarily loyal, full-price customers, either."
I've yet to actually see a firm which has begun with a social networking application, other than Facebook, a first-mover, which doesn't seem to be fairly defenseless and vunerable. On the other hand, it's much easier for an Amazon or Apple to add social networking, links to Facebook, or what have you, to their existing, robust business model. In that sense, my equity strategy process is thus already in a position to own social networking assets with relatively lower risk than chasing after Zynga or LinkedIn.
It's hard not to see a bubble forming in this online social networking space. The fundamentals are pretty much in place- hot user acceptance, more eager retail investors than companies and shares to buy, and a still-recovering IPO market.
But, investment bubbles being what they are, we'll probably be observing this one in hindsight sometime next year, or the year after.
Friday, March 18, 2011
Cloud Computing, Net Neutrality, Regulation & Economics
The Wall Street Journal columnist Holman Jenkins, Jr., wrote an interesting piece last week entitled What Price the Cloud?
In it, he reviewed the evolving situation regarding heavy internet capacity usage by firms like Netflix and Google, who, of course, want no pricing actions taken against them.
Jenkins wrote, in reference to "once-great firms like Digital Equipment and Wang Labs,"
"The scariest part: Even leaders who grasp what's happening to them often can't change cost structures and business models fast enough to survive."
That's actually a misunderstanding. DEC and Wang really never had a chance once the PC began to spread. No change in cost structure for producing a Wang system could save the company, because the product was just archaic in the face of a multi-functional PC of the late 1980s.
I'm rather surprised Jenkins made this mistake. Schumpeterian dynamics don't typically allow for accommodation by older firms to the newer trends which supplant them. There is little or no effective response. Rather, the older approaches simply disappear.
Still, the core of Jenkins' piece involves whether repricing of bandwidth will hurt companies like Netflix. Everyone's nightmare, of course, is that the cable companies begin to meter individual usage and charge for such usage volumes over a certain level. Jenkins notes how the introduction of ever lower-priced smart phones is driving up bandwidth demand from mobile sources.
He refers to an A.T. Kearney report which finds current economics of the internet unsustainable without some transfer of bandwidth costs to those that generate traffic. But for me, the key passage is this one,
"...but who's to say consumers can't judge for themselves if the restrictions are worth the price?"
Just the other day, I went online and selected three Netflix movies to view on my television. Into the instant queue they went, and I watched them, with no particular interruption, that afternoon (Although, I should note that Netflix has had some recent problems, disappearing from my Tivo unit for a day or so, and freezing up the system on occasion. I suspect usage overload).
What's that worth? For a flat monthly fee, I could watch 30 movies/month. I think that comes out to about 50 cents/film, and considerably less on a per/hour basis for entertainment.
If my cable bill rose by $10 for this level of service, will I really care? Is $10 so much that I'd revert to mailing discs back and forth to Netflix? Unlikely.
I saw the excellent movie Barney's Version in an art house theatre last weekend with a friend. It cost about $25 all in. The price differential between first-run movie experiences and arm-chair selection and viewing off of Netflix remains enormous. Temporarily raising the price of using bandwidth, until the traffic generators respond with more efficient delivery to economize on bandwidth usage, probably won't be crippling for most consumers.
What's really at issue here is this. Having learned the ability to buy, perhaps at artificially low prices, cloud-based experiences involving high-speed transfers of video and other high-volume communications applications, will consumers just return to old, pre-cloud habits, or will they willingly pay something for the ability to maintain their new levels of cloud-based information consumption?
But, in the short term, Jenkins is entirely correct when he writes of Apple, Netflix, Amazon and Google,
"All are betting heavily on the cloud. All need to start dealing realistically with the question of how the necessary bandwidth will be paid for."
Current enjoyment of on-demand, large swatches of bandwidth for free can't last much longer. The electronic highway is getting crowded, and sooner or later, tolls will have to be charged to allocate usage, or we'll all experience an inability to view full motion video in a manner that's appealing or worthwhile.
In it, he reviewed the evolving situation regarding heavy internet capacity usage by firms like Netflix and Google, who, of course, want no pricing actions taken against them.
Jenkins wrote, in reference to "once-great firms like Digital Equipment and Wang Labs,"
"The scariest part: Even leaders who grasp what's happening to them often can't change cost structures and business models fast enough to survive."
That's actually a misunderstanding. DEC and Wang really never had a chance once the PC began to spread. No change in cost structure for producing a Wang system could save the company, because the product was just archaic in the face of a multi-functional PC of the late 1980s.
I'm rather surprised Jenkins made this mistake. Schumpeterian dynamics don't typically allow for accommodation by older firms to the newer trends which supplant them. There is little or no effective response. Rather, the older approaches simply disappear.
Still, the core of Jenkins' piece involves whether repricing of bandwidth will hurt companies like Netflix. Everyone's nightmare, of course, is that the cable companies begin to meter individual usage and charge for such usage volumes over a certain level. Jenkins notes how the introduction of ever lower-priced smart phones is driving up bandwidth demand from mobile sources.
He refers to an A.T. Kearney report which finds current economics of the internet unsustainable without some transfer of bandwidth costs to those that generate traffic. But for me, the key passage is this one,
"...but who's to say consumers can't judge for themselves if the restrictions are worth the price?"
Just the other day, I went online and selected three Netflix movies to view on my television. Into the instant queue they went, and I watched them, with no particular interruption, that afternoon (Although, I should note that Netflix has had some recent problems, disappearing from my Tivo unit for a day or so, and freezing up the system on occasion. I suspect usage overload).
What's that worth? For a flat monthly fee, I could watch 30 movies/month. I think that comes out to about 50 cents/film, and considerably less on a per/hour basis for entertainment.
If my cable bill rose by $10 for this level of service, will I really care? Is $10 so much that I'd revert to mailing discs back and forth to Netflix? Unlikely.
I saw the excellent movie Barney's Version in an art house theatre last weekend with a friend. It cost about $25 all in. The price differential between first-run movie experiences and arm-chair selection and viewing off of Netflix remains enormous. Temporarily raising the price of using bandwidth, until the traffic generators respond with more efficient delivery to economize on bandwidth usage, probably won't be crippling for most consumers.
What's really at issue here is this. Having learned the ability to buy, perhaps at artificially low prices, cloud-based experiences involving high-speed transfers of video and other high-volume communications applications, will consumers just return to old, pre-cloud habits, or will they willingly pay something for the ability to maintain their new levels of cloud-based information consumption?
But, in the short term, Jenkins is entirely correct when he writes of Apple, Netflix, Amazon and Google,
"All are betting heavily on the cloud. All need to start dealing realistically with the question of how the necessary bandwidth will be paid for."
Current enjoyment of on-demand, large swatches of bandwidth for free can't last much longer. The electronic highway is getting crowded, and sooner or later, tolls will have to be charged to allocate usage, or we'll all experience an inability to view full motion video in a manner that's appealing or worthwhile.
Tuesday, January 25, 2011
Airlines Bid To Reverse Commoditization
Holman Jenkins, Jr., wrote a very good piece this past weekend in the Wall Street Journal concerning airlines' use of the internet to try to reverse the commoditization of their service.
In particular, he points out how American, Bob Crandall's old airline, withdrew its listings from some online intermediators, including Orbitz and Expedia. Southwest and Jet Blue have blocked access by intermediaries to their ticketing, as well. Six other airlines are working with AA to establish Open Axis to wrest control of ticketing and related extras back from the brokers.
Jenkins notes,
"Too, the carriers have shrewdly held back most of their ancillary goodies, allowing them to be sold only at their own websites, ticket kiosks or on the plane itself. Because the booking networks fear they will become irrelevant if they can't display the optional services along with basic fares and schedules, airlines see a ripe moment to negotiate a new business model with the online ticket sellers.
The bottom line for travelers, though, is not nearly as profound as some make out. The shopping experience is likely to change a bit, with more targeted freebies, upgrades and "upsells" aimed at individual passengers by airlines hoping to nourish customer loyalty. But the idea (or hope) that airlines will now be able to mint anticompetitive fares is unrealistic."
Fair enough, no homonym pun intended. But Jenkins misses the larger picture, which is simply the only swing of the strategic relationship control pendulum back towards airlines in decades. Crandall said, at the end of this career with AA, that, given a choice, he'd prefer to run Sabre, the spun off ticketing business, because it was much more profitable.
With one URL pretty much as good and accessible as the next, why shouldn't airlines begin to foster customer loyalty by tying more services and benefits to patronage, albeit in legally-defensible ways? Its' the sine qua non of marketing, i.e., get away from price competition and focus the customer on the total product/service experience.
No, it doesn't mean complete price freedom for the airlines. At some point, price ranges will become too great to sustain, but some latitude will be available as flyers are drawn into loyalty webs and, with the less pleasant environment for commercial flight, the ability to enjoy better overall treatment while traveling in exchange for choosing a preferred air carrier.
Sounds like a partial return to the 1960s that my late father knew, only with immediate mobile access.
In particular, he points out how American, Bob Crandall's old airline, withdrew its listings from some online intermediators, including Orbitz and Expedia. Southwest and Jet Blue have blocked access by intermediaries to their ticketing, as well. Six other airlines are working with AA to establish Open Axis to wrest control of ticketing and related extras back from the brokers.
Jenkins notes,
"Too, the carriers have shrewdly held back most of their ancillary goodies, allowing them to be sold only at their own websites, ticket kiosks or on the plane itself. Because the booking networks fear they will become irrelevant if they can't display the optional services along with basic fares and schedules, airlines see a ripe moment to negotiate a new business model with the online ticket sellers.
The bottom line for travelers, though, is not nearly as profound as some make out. The shopping experience is likely to change a bit, with more targeted freebies, upgrades and "upsells" aimed at individual passengers by airlines hoping to nourish customer loyalty. But the idea (or hope) that airlines will now be able to mint anticompetitive fares is unrealistic."
Fair enough, no homonym pun intended. But Jenkins misses the larger picture, which is simply the only swing of the strategic relationship control pendulum back towards airlines in decades. Crandall said, at the end of this career with AA, that, given a choice, he'd prefer to run Sabre, the spun off ticketing business, because it was much more profitable.
With one URL pretty much as good and accessible as the next, why shouldn't airlines begin to foster customer loyalty by tying more services and benefits to patronage, albeit in legally-defensible ways? Its' the sine qua non of marketing, i.e., get away from price competition and focus the customer on the total product/service experience.
No, it doesn't mean complete price freedom for the airlines. At some point, price ranges will become too great to sustain, but some latitude will be available as flyers are drawn into loyalty webs and, with the less pleasant environment for commercial flight, the ability to enjoy better overall treatment while traveling in exchange for choosing a preferred air carrier.
Sounds like a partial return to the 1960s that my late father knew, only with immediate mobile access.
Tuesday, September 07, 2010
Apple TV Returns
Last Thursday's Wall Street Journal articles discussing Apple's return to television left me with the sense that the company is now too late with too little to make a difference as it typically does in its other specialized digital processing hardware.
When I read that the new Apple TV offering includes Netflix streaming video access, it told me that Apple is accepting the latter's dominance in television-delivered internet-based video content.
That wouldn't seem to bode well for Apple TV's ability to differentiate from other similar video content purchase/storage systems.
Perhaps it's more of a niche-filling strategy, so that the firm offers something in this increasingly hot space.
However, as I noted in this post late last month, Tivo has finally marketed a relatively inexpensive keyboard remote. This will allow viewing of virtually any website through Tivo, which also streams Netflix.
Doesn't this make Apple very late with nothing particularly unique in this product/market space?
I think it does.
When I read that the new Apple TV offering includes Netflix streaming video access, it told me that Apple is accepting the latter's dominance in television-delivered internet-based video content.
That wouldn't seem to bode well for Apple TV's ability to differentiate from other similar video content purchase/storage systems.
Perhaps it's more of a niche-filling strategy, so that the firm offers something in this increasingly hot space.
However, as I noted in this post late last month, Tivo has finally marketed a relatively inexpensive keyboard remote. This will allow viewing of virtually any website through Tivo, which also streams Netflix.
Doesn't this make Apple very late with nothing particularly unique in this product/market space?
I think it does.
Friday, August 27, 2010
Tivo Finally Breaks Through To The Web With New Remote Unit
It's been more than a year in coming, as I predicted in this post from February of last year. But Tivo has finally provided a means of accessing the broader internet.
In that earlier post, I wrote,
"Thus, it would seem only a matter of time before TiVo provides a feature on its own website that would let me either type in my preferred websites, or simply import my web browser bookmarks, so that I can access this menu on my television screen via TiVo's content menu.
So there you have it. Just about two and a half years after my post regarding the necessary hardware and software for television viewing of internet web content, it's basically here. One software tweak by TiVo, and it's done. I'll have TiVo for access to online weekly programming, including news programs, either free or paid, and Netflix for my movie content. "
This week, I read in the Wall Street Journal that Tivo has released a remote, priced at $90, which features a slide-out keyboard and navigational buttons. In effect, what has been needed to make Tivo a gateway for television screen-based internet surfing.
At this price, as a remote, it's far simpler than another set-top box. And it comes from an established vendor.
I'm one step closer to cutting my monthly Comcast bill in half by dropping the cable television portion!
In that earlier post, I wrote,
"Thus, it would seem only a matter of time before TiVo provides a feature on its own website that would let me either type in my preferred websites, or simply import my web browser bookmarks, so that I can access this menu on my television screen via TiVo's content menu.
So there you have it. Just about two and a half years after my post regarding the necessary hardware and software for television viewing of internet web content, it's basically here. One software tweak by TiVo, and it's done. I'll have TiVo for access to online weekly programming, including news programs, either free or paid, and Netflix for my movie content. "
This week, I read in the Wall Street Journal that Tivo has released a remote, priced at $90, which features a slide-out keyboard and navigational buttons. In effect, what has been needed to make Tivo a gateway for television screen-based internet surfing.
At this price, as a remote, it's far simpler than another set-top box. And it comes from an established vendor.
I'm one step closer to cutting my monthly Comcast bill in half by dropping the cable television portion!
Wednesday, May 12, 2010
The FCC Puts US Communications Technology Growth In Jeopardy
Nothing scares off investment capital like uncertainty. Whether measured by higher required rates of return or lower 'certainty equivalents,' uncertainty of return of capital makes projects less attractive.
Thus, the FCC's recent second attempt to regulate the internet is likely to slow or halt growth of that important communications tool and the economic benefits it would otherwise create.
Having watched Congress rebuff 'net neutrality' earlier this year, the FCC is trying again by unilaterally declaring that the internet may be regulated under the 1996 Telecommunications Act.
Noting the year of that act, one already realizes that the Act came just at the dawn of the internet's rapid growth in the late 1990s. The notorious "dot com" bubble.
So, not only did the Act not even foresee developments only a few years hence, but, now, over ten years later, it is most assuredly out of date, drafted, as it was, with the intent of regulating telephony.
Having worked for ATT years ago, in the early years of my business career, I can attest that the last ten years of growth of internet-related services is beyond all comparison to growth in telephony for the last thirty. Once telephony went to wireless, the rest of the changes were of magnitude, more than type.
Other than that, companies like Verizon have only introduced innovation by expanding outside of voice communications to look more like cable companies.
The FCC's unilateral power play is sure to have very negative consequences for one vibrant sector of the US economy.
Think of how many new initiatives, perhaps along the lines of Facebook, Google, or the thousands of apps for iPhones, will now be choked off by uncertain returns to capital as the FCC clouds the business operating environment for such services.
It's bad enough that our government uses taxpayer money to prop up old, antiquated and unproductive sectors like auto manufacture. To now turn to the other end of the spectrum and move to limit growth in new economic sectors will surely lead to a moribund US economy in the not too distant future.
Thus, the FCC's recent second attempt to regulate the internet is likely to slow or halt growth of that important communications tool and the economic benefits it would otherwise create.
Having watched Congress rebuff 'net neutrality' earlier this year, the FCC is trying again by unilaterally declaring that the internet may be regulated under the 1996 Telecommunications Act.
Noting the year of that act, one already realizes that the Act came just at the dawn of the internet's rapid growth in the late 1990s. The notorious "dot com" bubble.
So, not only did the Act not even foresee developments only a few years hence, but, now, over ten years later, it is most assuredly out of date, drafted, as it was, with the intent of regulating telephony.
Having worked for ATT years ago, in the early years of my business career, I can attest that the last ten years of growth of internet-related services is beyond all comparison to growth in telephony for the last thirty. Once telephony went to wireless, the rest of the changes were of magnitude, more than type.
Other than that, companies like Verizon have only introduced innovation by expanding outside of voice communications to look more like cable companies.
The FCC's unilateral power play is sure to have very negative consequences for one vibrant sector of the US economy.
Think of how many new initiatives, perhaps along the lines of Facebook, Google, or the thousands of apps for iPhones, will now be choked off by uncertain returns to capital as the FCC clouds the business operating environment for such services.
It's bad enough that our government uses taxpayer money to prop up old, antiquated and unproductive sectors like auto manufacture. To now turn to the other end of the spectrum and move to limit growth in new economic sectors will surely lead to a moribund US economy in the not too distant future.
Tuesday, February 24, 2009
More On Internet Video Viewing
Only yesterday, I wrote this post concerning cable television companies moving to control internet distribution of their content-providers material. In that day's Wall Street Journal, a smallish column on the back page of the Marketplace section
"Online video is cutting into television, albeit slowly.
People are watching more video than ever on every type of screen -- television, the Internet and mobile devices -- according to a report on the nation's viewing habits to be released Monday by Nielsen Co.
Nielsen found that during the fourth quarter of 2008 the number of users and the time spent watching each of the three screen media rose from the previous quarter. "If people like video, they like it wherever they can get it," said Susan Whiting, vice chair of Nielsen.
The biggest jumps came in the number of viewers watching video on mobile devices and "time shifted" television, that is, programming viewed with a digital-video recorder. Each rose about 9% in the fourth quarter from the third quarter. Roughly 11 million people used mobile viewing and 74 million people watched DVR programming. Internet video users increased 2.3% to 123 million people.
In both time spent and number of viewers, Internet video grew at a rate twice that of television. Michael Vorhaus, president of consulting firm Frank N. Magid Associates, points to the growth as a threat to traditional television viewing. "It's not going to go away and it's not going to get better," he said.
For the first time in the Nielsen study, people ages 18-24 spent nearly the same amount of time -- roughly five hours -- watching Internet video each month as they did watching DVR programs. Other age brackets watched half as much or less Internet video than they did DVR video."
It reinforces why cable executives are so worried. Clearly, the tide is shifting more rapidly to DVR and internet. But since so much video is now being viewed straight from the internet, it's quite possible that the cable companies have already lost the entire younger, under-30 generation.
"Online video is cutting into television, albeit slowly.
People are watching more video than ever on every type of screen -- television, the Internet and mobile devices -- according to a report on the nation's viewing habits to be released Monday by Nielsen Co.
Nielsen found that during the fourth quarter of 2008 the number of users and the time spent watching each of the three screen media rose from the previous quarter. "If people like video, they like it wherever they can get it," said Susan Whiting, vice chair of Nielsen.
The biggest jumps came in the number of viewers watching video on mobile devices and "time shifted" television, that is, programming viewed with a digital-video recorder. Each rose about 9% in the fourth quarter from the third quarter. Roughly 11 million people used mobile viewing and 74 million people watched DVR programming. Internet video users increased 2.3% to 123 million people.
In both time spent and number of viewers, Internet video grew at a rate twice that of television. Michael Vorhaus, president of consulting firm Frank N. Magid Associates, points to the growth as a threat to traditional television viewing. "It's not going to go away and it's not going to get better," he said.
For the first time in the Nielsen study, people ages 18-24 spent nearly the same amount of time -- roughly five hours -- watching Internet video each month as they did watching DVR programs. Other age brackets watched half as much or less Internet video than they did DVR video."
It reinforces why cable executives are so worried. Clearly, the tide is shifting more rapidly to DVR and internet. But since so much video is now being viewed straight from the internet, it's quite possible that the cable companies have already lost the entire younger, under-30 generation.
Monday, February 23, 2009
Cable Television Bids To Control Internet Distribution
I wrote my last post about the coming trouble for cable television here, only a few weeks ago.
Thanks to my acquisition of a TiVo unit, which connects wirelessly with my computer network, I wrote,
"My TiVo accesses NetFlix through a wireless adapter which gives it access to my home computer network. While I can't program NetFlix choices on the TiVo controller, TiVo can access my NetFlix account on its own to retrieve my selections.
Thus, it would seem only a matter of time before TiVo provides a feature on its own website that would let me either type in my preferred websites, or simply import my web browser bookmarks, so that I can access this menu on my television screen via TiVo's content menu.
Once I can do this, TiVo would let me watch various programming websites, such as HuLu, as well as NBC's own content, delayed, on its website.
As I discussed this with my business partner Sunday morning, I remarked that, once TiVo does this, I am just one step away from cancelling my cable television service.
The only missing content would be my two primary news channels, CNBC and Fox. Once I could stream these, I'd be ready to cut the cable connection, slicing my monthly content delivery bill in half."
I've been writing about this eventuality for several years, and it would seem that it is finally within sight for an average American internet user and cable television subscriber.
Imagine my surprise, then, when I read an article in last week's Wall Street Journal revealing that US cable systems are in talks with content providers about restricting the latter's distribution of said content, for free, on the internet, on pain of losing some of the revenues they receive from the carriers.
Cable systems like Comcast, Cablevision, et.al., are not stupid. They see the future, and it looks like what happened to the music industry.
So they plan to provide extra internet-accessible content to those who retain their cable television subscriptions, thus, hopefully, saving the vulnerable half of their revenue streams.
I have been reflecting on this approach for the past few days, and I don't think it is a universal solution for the cable system companies.
Back in August of 2006, I wrote this post, in which I mused,
"I don't know what the arrangements are for the provision of, say, ABC's Lost or Desperate Housewives. But it would seem reasonable that production contracts for serial programming is going to change. Before, it was just about syndication rights and royalties. Now, a good production company with a hot property can air it initially via a network, then go solo after the brand has been built. Or, perhaps they'll just go directly to a YouTube or other online video content concentrator site.
Then again, perhaps a really good production shop will simply secure its own financing via the capital markets. Maybe they'll sign a long-term distribution agreement with YouTube to provide basic cashflow while they develop properties for the online market. The possibilities seem truly too many to contemplate just yet."
I still think that scenario can occur. It boils down to branding, doesn't it?
Someone like Larry David, Jerry Seinfeld, or Dick Wolf can probably secure financing, run a few pilot videos on YouTube or another popular site, and then invite viewers to screen a new series directly from their website, going to a paying basis after one viewing from that address.
My point is, while new, unknown content providers may still have to approach networks, cable or broadcast, and be handled by the cable television systems, established artists would not seem to have this problem.
Whether they be actors, writers, directors or producers, veteran talent would seem to be able to marshal other necessary talent, funding, and equipment, in order to create and market their new content directly to viewers' televisions over the internet.
They might go directly to TiVo, as a distributor, among other outlets, for preferred, easy access.
The move by cable companies, of which the Journal article wrote, is surely a clever step, if not a bit late in the game. It will keep a number of viewers connected to video content via their cable television subscriptions.
But I do not think it's a long term, nor necessarily foolproof solution. It seems to me that the Schumpeterian winds of change have already begun blowing at gale force through this sector. As the Journal piece noted,
"Some critics say it might be too late to put the online-video genie back in the subscription bottle. A growing number of people are growing accustomed to watching TV shows online, without paying. About 136 million people watched online video content in January, up 16% from the same period in 2008, according to Nielsen Online."
That would not seem to bode well for cable systems, no matter what they try to do to block this trend. But, they can always ask the music industry executives about this sort of trend. Their experience may hold more parallels than cable industry executives dare to imagine.
Thanks to my acquisition of a TiVo unit, which connects wirelessly with my computer network, I wrote,
"My TiVo accesses NetFlix through a wireless adapter which gives it access to my home computer network. While I can't program NetFlix choices on the TiVo controller, TiVo can access my NetFlix account on its own to retrieve my selections.
Thus, it would seem only a matter of time before TiVo provides a feature on its own website that would let me either type in my preferred websites, or simply import my web browser bookmarks, so that I can access this menu on my television screen via TiVo's content menu.
Once I can do this, TiVo would let me watch various programming websites, such as HuLu, as well as NBC's own content, delayed, on its website.
As I discussed this with my business partner Sunday morning, I remarked that, once TiVo does this, I am just one step away from cancelling my cable television service.
The only missing content would be my two primary news channels, CNBC and Fox. Once I could stream these, I'd be ready to cut the cable connection, slicing my monthly content delivery bill in half."
I've been writing about this eventuality for several years, and it would seem that it is finally within sight for an average American internet user and cable television subscriber.
Imagine my surprise, then, when I read an article in last week's Wall Street Journal revealing that US cable systems are in talks with content providers about restricting the latter's distribution of said content, for free, on the internet, on pain of losing some of the revenues they receive from the carriers.
Cable systems like Comcast, Cablevision, et.al., are not stupid. They see the future, and it looks like what happened to the music industry.
So they plan to provide extra internet-accessible content to those who retain their cable television subscriptions, thus, hopefully, saving the vulnerable half of their revenue streams.
I have been reflecting on this approach for the past few days, and I don't think it is a universal solution for the cable system companies.
Back in August of 2006, I wrote this post, in which I mused,
"I don't know what the arrangements are for the provision of, say, ABC's Lost or Desperate Housewives. But it would seem reasonable that production contracts for serial programming is going to change. Before, it was just about syndication rights and royalties. Now, a good production company with a hot property can air it initially via a network, then go solo after the brand has been built. Or, perhaps they'll just go directly to a YouTube or other online video content concentrator site.
Then again, perhaps a really good production shop will simply secure its own financing via the capital markets. Maybe they'll sign a long-term distribution agreement with YouTube to provide basic cashflow while they develop properties for the online market. The possibilities seem truly too many to contemplate just yet."
I still think that scenario can occur. It boils down to branding, doesn't it?
Someone like Larry David, Jerry Seinfeld, or Dick Wolf can probably secure financing, run a few pilot videos on YouTube or another popular site, and then invite viewers to screen a new series directly from their website, going to a paying basis after one viewing from that address.
My point is, while new, unknown content providers may still have to approach networks, cable or broadcast, and be handled by the cable television systems, established artists would not seem to have this problem.
Whether they be actors, writers, directors or producers, veteran talent would seem to be able to marshal other necessary talent, funding, and equipment, in order to create and market their new content directly to viewers' televisions over the internet.
They might go directly to TiVo, as a distributor, among other outlets, for preferred, easy access.
The move by cable companies, of which the Journal article wrote, is surely a clever step, if not a bit late in the game. It will keep a number of viewers connected to video content via their cable television subscriptions.
But I do not think it's a long term, nor necessarily foolproof solution. It seems to me that the Schumpeterian winds of change have already begun blowing at gale force through this sector. As the Journal piece noted,
"Some critics say it might be too late to put the online-video genie back in the subscription bottle. A growing number of people are growing accustomed to watching TV shows online, without paying. About 136 million people watched online video content in January, up 16% from the same period in 2008, according to Nielsen Online."
That would not seem to bode well for cable systems, no matter what they try to do to block this trend. But, they can always ask the music industry executives about this sort of trend. Their experience may hold more parallels than cable industry executives dare to imagine.
Tuesday, February 03, 2009
Tivo's Next Step: The Internet?
As my Comcast system upgraded to digital, they cleverly rendered my old VCR's multi-channel tuner useless, since anything I recorded had to come through my television's feed from the digital cable tuner.
Thus, I lost the ability to watch one program while recording another. Stripped of every American's God-given right to do this, I recently purchased a TiVo unit for simultaneous digital video recording, and all the other benefits of the service.
In particular, I wanted to also stream instant NetFlix content to my television, rather than simply my desktop computer.
As I have using the TiVo unit for a month or so, I began to consider how it can and probably will morph into a general purpose web content player.
For example, within a week of setting up the TiVo unit, it underwent a few automated software upgrades, integrating the NetFlix feed more seamlessly into the menu.
My TiVo accesses NetFlix through a wireless adapter which gives it access to my home computer network. While I can't program NetFlix choices on the TiVo controller, TiVo can access my NetFlix account on its own to retrieve my selections.
Thus, it would seem only a matter of time before TiVo provides a feature on its own website that would let me either type in my preferred websites, or simply import my web browser bookmarks, so that I can access this menu on my television screen via TiVo's content menu.
Once I can do this, TiVo would let me watch various programming websites, such as HuLu, as well as NBC's own content, delayed, on its website.
As I discussed this with my business partner Sunday morning, I remarked that, once TiVo does this, I am just one step away from cancelling my cable television service.
The only missing content would be my two primary news channels, CNBC and Fox. Once I could stream these, I'd be ready to cut the cable connection, slicing my monthly content delivery bill in half.
I went exploring yesterday, and found that CNBC offers a premium content subscription of roughly $10/month which provides a video stream of their channel. So that fits the model about which I hypothesized over two years ago in a post about the eventual disintermediation of cable by individual channels offering separate internet-based viewing for a monthly fee.
Fox has some video streams, but I haven't yet found one that matches what is broadcast on their channel live. It's probably there somewhere. If not, they surely can do what CNBC is doing, at their whim.
So there you have it. Just about two and a half years after my post regarding the necessary hardware and software for television viewing of internet web content, it's basically here. One software tweak by TiVo, and it's done. I'll have TiVo for access to online weekly programming, including news programs, either free or paid, and Netflix for my movie content.
Thus, I lost the ability to watch one program while recording another. Stripped of every American's God-given right to do this, I recently purchased a TiVo unit for simultaneous digital video recording, and all the other benefits of the service.
In particular, I wanted to also stream instant NetFlix content to my television, rather than simply my desktop computer.
As I have using the TiVo unit for a month or so, I began to consider how it can and probably will morph into a general purpose web content player.
For example, within a week of setting up the TiVo unit, it underwent a few automated software upgrades, integrating the NetFlix feed more seamlessly into the menu.
My TiVo accesses NetFlix through a wireless adapter which gives it access to my home computer network. While I can't program NetFlix choices on the TiVo controller, TiVo can access my NetFlix account on its own to retrieve my selections.
Thus, it would seem only a matter of time before TiVo provides a feature on its own website that would let me either type in my preferred websites, or simply import my web browser bookmarks, so that I can access this menu on my television screen via TiVo's content menu.
Once I can do this, TiVo would let me watch various programming websites, such as HuLu, as well as NBC's own content, delayed, on its website.
As I discussed this with my business partner Sunday morning, I remarked that, once TiVo does this, I am just one step away from cancelling my cable television service.
The only missing content would be my two primary news channels, CNBC and Fox. Once I could stream these, I'd be ready to cut the cable connection, slicing my monthly content delivery bill in half.
I went exploring yesterday, and found that CNBC offers a premium content subscription of roughly $10/month which provides a video stream of their channel. So that fits the model about which I hypothesized over two years ago in a post about the eventual disintermediation of cable by individual channels offering separate internet-based viewing for a monthly fee.
Fox has some video streams, but I haven't yet found one that matches what is broadcast on their channel live. It's probably there somewhere. If not, they surely can do what CNBC is doing, at their whim.
So there you have it. Just about two and a half years after my post regarding the necessary hardware and software for television viewing of internet web content, it's basically here. One software tweak by TiVo, and it's done. I'll have TiVo for access to online weekly programming, including news programs, either free or paid, and Netflix for my movie content.
Retail Selection & The Recession: The A.T. Cross Case
After this most recent Christmas' shopping season, local malls had markdowns well into the range of 50%. My younger daughter caught onto this quickly, saying to me,
'Dad, if I had the money right now, I'd be buying a lot, because these prices are so low.'
Pondering the losses these retailers were taking, it occurred to me that we will not soon see such merchandise assortment at our local retailers. Whether its size, color, or style, you can bet that what inventory is carried will be well into the broad middle swath of sizes and styles.
In this vein, I want to relate the long search I undertook for a rather simple item- a replacement for the fine blue ink cartridge in my 20+ year old Cross pen.
A.T. Cross pens are not anywhere near the price and prestige of a Mont Blanc. Yet, try to find refills, or even the pens, in today's retail market, and you will be disappointed.
The local paper-and-gift emporia at which they were once a graduation gift staple are now gone. Our own town's retailer closed after Christmas three years ago.
Big box office suppliers don't carry them, to my knowledge. And the Staples aisle in my local Stop & Shop only had a single package of two medium black ink refills.
Despite roughly a month of visiting local drug, grocery and office supply stores, I found no fine blue ink refills.
Then it hit me where I needed to look.
In an economy where you sell a rather low-value item of medium price, through a channel that is disappearing, how do you remain viable? Assure a presence for buyers who value your brand?
I Googled "A T Cross," and immediately found their website.
Could it be that the internet is the best thing that ever happened to A.T. Cross? Perhaps so.
Their website is very well designed, with a very easy-to-find section for buying refills. On their own site, Cross can feature selected products, as well as cleanly display each and every item they offer- something my local gift store never did. They offer discounts for multi-pack refills, with low shipping costs. The refills arrived within the week.
I could go on about Cross, but my point is that I believe the pen-and-gift merchant provides a good example of what other retailers will be doing in the future.
That is, relying on internet site sales for serving customers with less mainstream tastes. It's the perfect solution.
As it is, I buy a lot of clothing for myself and my children from LL Bean, and other select online retailers.
Why not J Crew and Gap?
In a rather ironic twist, the old "bricks vs. clicks" war of retailing may have been given a huge push toward clicks because of this past Christmas' dismal retailing results.
'Dad, if I had the money right now, I'd be buying a lot, because these prices are so low.'
Pondering the losses these retailers were taking, it occurred to me that we will not soon see such merchandise assortment at our local retailers. Whether its size, color, or style, you can bet that what inventory is carried will be well into the broad middle swath of sizes and styles.
In this vein, I want to relate the long search I undertook for a rather simple item- a replacement for the fine blue ink cartridge in my 20+ year old Cross pen.
A.T. Cross pens are not anywhere near the price and prestige of a Mont Blanc. Yet, try to find refills, or even the pens, in today's retail market, and you will be disappointed.
The local paper-and-gift emporia at which they were once a graduation gift staple are now gone. Our own town's retailer closed after Christmas three years ago.
Big box office suppliers don't carry them, to my knowledge. And the Staples aisle in my local Stop & Shop only had a single package of two medium black ink refills.
Despite roughly a month of visiting local drug, grocery and office supply stores, I found no fine blue ink refills.
Then it hit me where I needed to look.
In an economy where you sell a rather low-value item of medium price, through a channel that is disappearing, how do you remain viable? Assure a presence for buyers who value your brand?
I Googled "A T Cross," and immediately found their website.
Could it be that the internet is the best thing that ever happened to A.T. Cross? Perhaps so.
Their website is very well designed, with a very easy-to-find section for buying refills. On their own site, Cross can feature selected products, as well as cleanly display each and every item they offer- something my local gift store never did. They offer discounts for multi-pack refills, with low shipping costs. The refills arrived within the week.
I could go on about Cross, but my point is that I believe the pen-and-gift merchant provides a good example of what other retailers will be doing in the future.
That is, relying on internet site sales for serving customers with less mainstream tastes. It's the perfect solution.
As it is, I buy a lot of clothing for myself and my children from LL Bean, and other select online retailers.
Why not J Crew and Gap?
In a rather ironic twist, the old "bricks vs. clicks" war of retailing may have been given a huge push toward clicks because of this past Christmas' dismal retailing results.
Saturday, January 10, 2009
Continuing Erosion of Music Label Power: The Case of Erin McCarley
This past Thursday's Wall Street Journal contained a review of a new artist named Erin McCarley.
I'm not interested in reviewing Ms. McCarley's music here. But what did catch my attention was the manner in which she has risen to some measure of popularity prior to having a recording contract with any major label.
As I have written elsewhere on this blog in prior years, including this post, it's only a matter of time before record labels are nearly useless. In that post, from October, 2006, I noted,
"The second one ran in yesterday's edition, and dealt with, ironically, how easy it now is for independent bands to become successful with little or no money, no traditional record label and, thus, no old media agent. Some indie bands do retain what one might call eagents, such as NetWerk Records, a combination indie label and artist management firm. This seems to support my contention that agents, as we have known them, will also be unnecessary for the coming era of online digital video content production, found here.
What's interesting is that established bands are also exploiting digital downloads, in order to capture immediate interest by fans. Rather than expect, or let, prospective buyers go to iTunes to buy and download music, they are embedding a MySpace MP3 player on their MySpace sites."
This is exactly what Ms. McCarley had done. The Journal article details her being paired with another musician to complete her own song-writing and singing efforts for a first album of work,
"As they cut the record without any outside funding- Mr. Kenney pulled together a band for the sessions- Ms. McCarley understood she could have a level of control over her career.
They sent out a six-song sampler to industry insiders and posted some songs on Ms. McCarley's MySpace page. A showcase performance at last year's South by Southwest Festival resulted in a bidding war for her disc.
Having a finished album they could distribute without a major-label marketing push, Ms. McCarley and Mr. Kenney negotiated from a position of strength."
I found and listened to her music on the MySpace page, just as the article described. They are full-length, high-quality tracks. The article also mentions her being featured on iTunes, with the opening track of her album available there for free.
It's wonderful to see such a seamless combination of technological and marketing/promotional channels occur to give small business people, i.e., a musical artist, the ability to start her career without the suffocating 'help' of a major recording label.
Instead, today's mix of free internet social sites, layered applications like embedded music and video, and iTunes have resulted in a talented artist building her own business and career her way, with minimal need for outside funding or technology.
Along with others, I foresaw this several years ago. But, with each passing year, it's evidently becoming easier to execute.
I'm not interested in reviewing Ms. McCarley's music here. But what did catch my attention was the manner in which she has risen to some measure of popularity prior to having a recording contract with any major label.
As I have written elsewhere on this blog in prior years, including this post, it's only a matter of time before record labels are nearly useless. In that post, from October, 2006, I noted,
"The second one ran in yesterday's edition, and dealt with, ironically, how easy it now is for independent bands to become successful with little or no money, no traditional record label and, thus, no old media agent. Some indie bands do retain what one might call eagents, such as NetWerk Records, a combination indie label and artist management firm. This seems to support my contention that agents, as we have known them, will also be unnecessary for the coming era of online digital video content production, found here.
What's interesting is that established bands are also exploiting digital downloads, in order to capture immediate interest by fans. Rather than expect, or let, prospective buyers go to iTunes to buy and download music, they are embedding a MySpace MP3 player on their MySpace sites."
This is exactly what Ms. McCarley had done. The Journal article details her being paired with another musician to complete her own song-writing and singing efforts for a first album of work,
"As they cut the record without any outside funding- Mr. Kenney pulled together a band for the sessions- Ms. McCarley understood she could have a level of control over her career.
They sent out a six-song sampler to industry insiders and posted some songs on Ms. McCarley's MySpace page. A showcase performance at last year's South by Southwest Festival resulted in a bidding war for her disc.
Having a finished album they could distribute without a major-label marketing push, Ms. McCarley and Mr. Kenney negotiated from a position of strength."
I found and listened to her music on the MySpace page, just as the article described. They are full-length, high-quality tracks. The article also mentions her being featured on iTunes, with the opening track of her album available there for free.
It's wonderful to see such a seamless combination of technological and marketing/promotional channels occur to give small business people, i.e., a musical artist, the ability to start her career without the suffocating 'help' of a major recording label.
Instead, today's mix of free internet social sites, layered applications like embedded music and video, and iTunes have resulted in a talented artist building her own business and career her way, with minimal need for outside funding or technology.
Along with others, I foresaw this several years ago. But, with each passing year, it's evidently becoming easier to execute.
Tuesday, April 29, 2008
GE On The "Raging Bull"- What Don't They Get?
I have received quite a few visits from this referring site lately. Evidently, due to my posts over the past several years regarding GE, its current CEO, Jeff Immelt, and the man who selected him for this role, retired GE CEO Jack Welch, some of the denizens of this stock message board found my blog and those related posts.
Over the past few months I would see this referring URL occasionally. However, with the recent frenzy over GE's missed earnings number, Jack Welch's comments on the event, my appearance on Bill O'Reilly's program dealing with GE, Immelt and Iran, and the company's recent annual meeting, the number of visits from this message board have picked up in frequency.
Here is what the latest linked page of comments between various posting readers on the message board says (my emphasis in bold),
"Your post got me thinking about a link that I posted not too long ago. It is "The Reasoned Sceptic". I will add the link a little further on. When GE went down, I thought The Reasoned Sceptic would do a writeup on GE/Immelt/Welch. Think I checked too soon after 4/11/2008 and found nothing new. With your post, I checked The Reasoned Sceptic today and found some rather interesting and uncomplimentary information about GE/Immelt/Welch. When you go to the link, scroll down the right side and look for these listings:
GE (25 writeups)
Immelt (19 writeups)
Jack Welch (5 writeups)
- The writeups at The Reasoned Sceptic, the last time I linked to the site, sounded believable. With GE coasting along, you might not really know what to believe about GE. With the miss by GE the writeups seem to have more weight! - The newer writeups were also troubling. You will have to go to the link and do some reading...you really do not want me to explain...this post may get long as it is. It will take some time...but worth reading. As Naz mentioned, read when you get your coffee or tea or whatever you like on the weekends.
- After reading "The Reasoned Sceptic", looking at the YAHOO chart of the GE/funds and the Excel chart of data...here are some thoughts on GE:
1. GE is in a predicament for this year. What will happen if GE "does not" do better than the S&P 500 or get back to last year closing price of $37.07? GE "just might" be the best place to be this year?
2. You would expect Jeff and the board to be pulling out all the stops to make GE move. If not, GE will come under much "greater" pressure! No excuses will fly this year if the market goes up and GE does not!
3. "IF" GE does well this year, maybe Jeff will save his job for another few years? If a CEO change is going to happen, it will take some time. For now, expect GE to continue in its current form.
4. If GE were to finally break up its current structure, "that" will also take some time. Whatever "might" happen to GE, you are looking at one to two years... All depends on how high Jeff can make GE jump this year...in more ways than one.
5. GE is moving very well as of Friday! They lag the market and need to first "catch up" to the market. After that, will GE continue to $42.12 like last year or better? GE needs to make a statement this year and finish with a "BANG"...and I do not mean Jack with the "gun"...then again...
6. It is easy to follow GE on the YAHOO chart with the five funds. I have added all the funds from the GE 401K for more detail and they all are "index funds" or represent the market. GE needs to mix with the funds or "lead" some...if not all going forward.
7. GE has not really been strong through the middle of the year...and last year is questionable to me. It does try to finish the year up. Will there be a run up from here going forward or a year end run up? Just have to look each day!!!
Hope all the links work and "don't" miss "THE REASONED SCEPTIC". May "rattle your cage" on GE, but says a lot that slowly got to me over the years. As mentioned, GE is just a choice...that I have not used very often. It would be a surprise to see GE do very little this year... Look at the links and do some reading. Any and all information on GE is a help if you are in GE or plan to be in GE. "
Here's what I don't understand.
First, how can these readers use terms like 'sounds believable,' or 'interesting and uncomplimentary information,' and 'may rattle your cage on GE?'
All of my posts are based on real performance numbers in the market- total returns and/or price changes of GE, the S&P500, or United Technologies. None use forward-estimates.
One or two have used GE fundamental information from its income statement, in order to compare its performance with benchmarks from my own proprietary research, as well as with the S&P500.
Of course, I do include Immelt's compensation numbers from the Wall Street Journal and, on perhaps one or two occasions, Forbes.
What's not to believe? And be upset? Why? It is what it is. GE has performed badly for shareholders under Immelt, who has been paid more than $20MM in cash, plus another $100MM or more in deferred compensation, and there's just no getting away from that fact.
Second, in what alternative universe are these 'investors' living? They write comments about Immelt and the board really having to 'pull out all the stops,' or makeup in one year for all of Immelt's prior mediocre performance. They toss numbers which I assume are hypothetical GE stock prices around like they have magical properties. As if Immelt or the board can make the buyers and sellers of the company's stock arrive at some magic number, to the penny.
As if, indeed.
Finally, these people chat about GE stock like it's the only investment vehicle in the world. For God's sake, people, have any of you heard of the S&P500?
Quit wasting your time kvetching about the stock of some low-growth industrial conglomerate has-been, and, if nothing else, go put your money into the S&P. On the basis of nearly seven years of data, chances are you'll earn a better total return there than in Immelt's GE.
But, what do I know? I just stick to the numbers and write about what I see.
Over the past few months I would see this referring URL occasionally. However, with the recent frenzy over GE's missed earnings number, Jack Welch's comments on the event, my appearance on Bill O'Reilly's program dealing with GE, Immelt and Iran, and the company's recent annual meeting, the number of visits from this message board have picked up in frequency.
Here is what the latest linked page of comments between various posting readers on the message board says (my emphasis in bold),
"Your post got me thinking about a link that I posted not too long ago. It is "The Reasoned Sceptic". I will add the link a little further on. When GE went down, I thought The Reasoned Sceptic would do a writeup on GE/Immelt/Welch. Think I checked too soon after 4/11/2008 and found nothing new. With your post, I checked The Reasoned Sceptic today and found some rather interesting and uncomplimentary information about GE/Immelt/Welch. When you go to the link, scroll down the right side and look for these listings:
GE (25 writeups)
Immelt (19 writeups)
Jack Welch (5 writeups)
- The writeups at The Reasoned Sceptic, the last time I linked to the site, sounded believable. With GE coasting along, you might not really know what to believe about GE. With the miss by GE the writeups seem to have more weight! - The newer writeups were also troubling. You will have to go to the link and do some reading...you really do not want me to explain...this post may get long as it is. It will take some time...but worth reading. As Naz mentioned, read when you get your coffee or tea or whatever you like on the weekends.
- After reading "The Reasoned Sceptic", looking at the YAHOO chart of the GE/funds and the Excel chart of data...here are some thoughts on GE:
1. GE is in a predicament for this year. What will happen if GE "does not" do better than the S&P 500 or get back to last year closing price of $37.07? GE "just might" be the best place to be this year?
2. You would expect Jeff and the board to be pulling out all the stops to make GE move. If not, GE will come under much "greater" pressure! No excuses will fly this year if the market goes up and GE does not!
3. "IF" GE does well this year, maybe Jeff will save his job for another few years? If a CEO change is going to happen, it will take some time. For now, expect GE to continue in its current form.
4. If GE were to finally break up its current structure, "that" will also take some time. Whatever "might" happen to GE, you are looking at one to two years... All depends on how high Jeff can make GE jump this year...in more ways than one.
5. GE is moving very well as of Friday! They lag the market and need to first "catch up" to the market. After that, will GE continue to $42.12 like last year or better? GE needs to make a statement this year and finish with a "BANG"...and I do not mean Jack with the "gun"...then again...
6. It is easy to follow GE on the YAHOO chart with the five funds. I have added all the funds from the GE 401K for more detail and they all are "index funds" or represent the market. GE needs to mix with the funds or "lead" some...if not all going forward.
7. GE has not really been strong through the middle of the year...and last year is questionable to me. It does try to finish the year up. Will there be a run up from here going forward or a year end run up? Just have to look each day!!!
Hope all the links work and "don't" miss "THE REASONED SCEPTIC". May "rattle your cage" on GE, but says a lot that slowly got to me over the years. As mentioned, GE is just a choice...that I have not used very often. It would be a surprise to see GE do very little this year... Look at the links and do some reading. Any and all information on GE is a help if you are in GE or plan to be in GE. "
Here's what I don't understand.
First, how can these readers use terms like 'sounds believable,' or 'interesting and uncomplimentary information,' and 'may rattle your cage on GE?'
All of my posts are based on real performance numbers in the market- total returns and/or price changes of GE, the S&P500, or United Technologies. None use forward-estimates.
One or two have used GE fundamental information from its income statement, in order to compare its performance with benchmarks from my own proprietary research, as well as with the S&P500.
Of course, I do include Immelt's compensation numbers from the Wall Street Journal and, on perhaps one or two occasions, Forbes.
What's not to believe? And be upset? Why? It is what it is. GE has performed badly for shareholders under Immelt, who has been paid more than $20MM in cash, plus another $100MM or more in deferred compensation, and there's just no getting away from that fact.
Second, in what alternative universe are these 'investors' living? They write comments about Immelt and the board really having to 'pull out all the stops,' or makeup in one year for all of Immelt's prior mediocre performance. They toss numbers which I assume are hypothetical GE stock prices around like they have magical properties. As if Immelt or the board can make the buyers and sellers of the company's stock arrive at some magic number, to the penny.
As if, indeed.
Finally, these people chat about GE stock like it's the only investment vehicle in the world. For God's sake, people, have any of you heard of the S&P500?
Quit wasting your time kvetching about the stock of some low-growth industrial conglomerate has-been, and, if nothing else, go put your money into the S&P. On the basis of nearly seven years of data, chances are you'll earn a better total return there than in Immelt's GE.
But, what do I know? I just stick to the numbers and write about what I see.
Tuesday, February 26, 2008
Andy Kessler On 'Net Neutrality' & Ed Markey's Bill
Yesterday's Wall Street Journal featured an excellent editorial by Andy Kessler, an occasional contributor, entitled "Internet Wrecking Ball." In contrast to his last Journal piece, with which I mostly disagreed with, in this post last month, this time Kessler provides good evidence and insight to support his contention that Ed Markey, in combination with a few existing internet titans, are conspiring to give us all second-rate internet capabilities for a long time to come.
Kessler begins his explanation of the issue thusly,
"The Federal Communications Commission is holding a public hearing today at Harvard Law School in Cambridge, Mass., to build the case for the ill-conceived idea of preventing, as Mr. Markey's bill would, network operators from using technologies that may favor one application over another.
It's a bad idea because the only thing Mr. Markey's bill will preserve is mediocrity via the lack of competition, and full employment for regulators micromanaging a business whose very innovation comes from the lack of rules. With net neutrality, there will be no new competition and no incentives for build outs. Bandwidth speeds will stagnate, and new services will wither from bandwidth starvation.
The idea of network neutrality is that all of our Internet packets are equal, and that the spirit of the Internet and its ability to create wonderful new applications like Google, MySpace and Facebook is predicated on open (albeit limited) access for all. Yet, despite an overabundance of bandwidth pulsing throughout the U.S., we are still stuck with rationing to our homes. Haven't we learned that advancing technology is never served by arbitrary rules to divvy up scarce resources? Look at the dearth of good cell phone applications: Rules make incumbents lazy."
Kessler makes a very important point about the pace of technology in this sector. In a classically Schumpeterian manner, yesterday's 'winners' are hoping to codify their victory, thus slowing change to a crawl, if it is allowed to occur at all.
How did this happen to what should be a sector experiencing breakneck competition and improvement in service, capacity, and consumer value? Kessler writes,
"In plain English: Comcast is this country's second largest Internet provider and has been plagued by mostly illegal copyrighted video file sharing that is chewing up half or more of its precious bandwidth. More of that than you'd think consists of "Family Guy" episodes. Comcast, whose growth is slowing and whose stock is down 30%, is acting scared of the day when video is delivered one episode at a time instead of via Basic Cable, threatening its bread and butter.
So Comcast took matters into its own hands and applied a sneaky technical fix, a fake message that severely slowed these peer-to-peer video downloads. By the way, this same technique is used by the so-called Great Firewall of China to censor search requests like "Falun" or "Tiananmen." Nice company.
So that's it, isn't it? Comcast's franchise is threatened so it got out the bag of dirty tricks. Google, who you would think has a huge incentive to kill the video star, supports net neutrality. Google has become an incumbent, protecting its no-longer-modern textual ads."
As I wrote in this post last April, and Kessler now reinforces, Comcast is rightly worried about video programming disintermediation which will render its cable television product offerings nearly worthless much sooner than it had ever imagined. Even Google is sufficiently entrenched in the current technological environment to wish for its continued stagnation. When you're the largest guy on the block, and can intimidate everybody else, you don't mind if inward movement to the neighborhood is prohibited.
"We need policy to help cut a path for more competition, rather than protecting incumbents -- a Bandwidth Competition Act of 2008, not bogus net neutrality. All takers should be allowed access to poles or underground conduits. This is where neutrality should be enforced, instead of being a choke point.
Municipal or privately run wireless data services using Wi-Fi or WiMax should be sprouting like weeds. But they aren't being built because of lack of access to street lights, of all things, to set up access points. Verizon is busy rolling out a fiber optic service, FIOS, that will provide much higher speeds and real competition to Comcast. But it is slow going, as state by state video franchise rules still favor cable over any newcomers.
A stroke of a pen can cure these ills, incumbents be damned. They will adjust. I personally would climb telephone poles on my street to run fiber if I could get 100 megabit Internet service. Any takers? Talk about an economic stimulus; this is the type of infrastructure we need. The stock market will fund it all as well as resolve overbuild problems.
Don't think of Internet access as a static business -- someone put in phone lines 50 years ago or cable lines 20 years ago, and we are stuck with their limitations. Technology changes the game every few years. Even fiber lines put in today will be obsolete within 10 years and need upgrading. Same for wireless systems."
As a veteran of the last years of AT&T's crumbling monopoly, I can attest to all of what Kessler contends. Once access is opened, and bogus arguments for protecting whatever 'embedded base' is the focus of the particular technological debate, competition will blossom, and customers will be incredibly better served.
Once MCI opened the tiny crack in AT&T's armor by suing for the right to lease lines and resell them, thus arbitraging the dominant phone company's pricing policies against the real costs to serve customers, the end of AT&T was just a matter of time.
Like AT&T, Comcast's own infrastructure has a useful life, not an indefinite one. Its regulatory-granted monopoly made sense for the time at which it was granted, with the technology and market forces then in existence.
Things are different now, and the Federal and state regulatory schemes should acknowledge that by providing rules which favor customer benefits, not the maintenance of recently-enshrined oligopolistic market conditions.
Kessler begins his explanation of the issue thusly,
"The Federal Communications Commission is holding a public hearing today at Harvard Law School in Cambridge, Mass., to build the case for the ill-conceived idea of preventing, as Mr. Markey's bill would, network operators from using technologies that may favor one application over another.
It's a bad idea because the only thing Mr. Markey's bill will preserve is mediocrity via the lack of competition, and full employment for regulators micromanaging a business whose very innovation comes from the lack of rules. With net neutrality, there will be no new competition and no incentives for build outs. Bandwidth speeds will stagnate, and new services will wither from bandwidth starvation.
The idea of network neutrality is that all of our Internet packets are equal, and that the spirit of the Internet and its ability to create wonderful new applications like Google, MySpace and Facebook is predicated on open (albeit limited) access for all. Yet, despite an overabundance of bandwidth pulsing throughout the U.S., we are still stuck with rationing to our homes. Haven't we learned that advancing technology is never served by arbitrary rules to divvy up scarce resources? Look at the dearth of good cell phone applications: Rules make incumbents lazy."
Kessler makes a very important point about the pace of technology in this sector. In a classically Schumpeterian manner, yesterday's 'winners' are hoping to codify their victory, thus slowing change to a crawl, if it is allowed to occur at all.
How did this happen to what should be a sector experiencing breakneck competition and improvement in service, capacity, and consumer value? Kessler writes,
"In plain English: Comcast is this country's second largest Internet provider and has been plagued by mostly illegal copyrighted video file sharing that is chewing up half or more of its precious bandwidth. More of that than you'd think consists of "Family Guy" episodes. Comcast, whose growth is slowing and whose stock is down 30%, is acting scared of the day when video is delivered one episode at a time instead of via Basic Cable, threatening its bread and butter.
So Comcast took matters into its own hands and applied a sneaky technical fix, a fake message that severely slowed these peer-to-peer video downloads. By the way, this same technique is used by the so-called Great Firewall of China to censor search requests like "Falun" or "Tiananmen." Nice company.
So that's it, isn't it? Comcast's franchise is threatened so it got out the bag of dirty tricks. Google, who you would think has a huge incentive to kill the video star, supports net neutrality. Google has become an incumbent, protecting its no-longer-modern textual ads."
As I wrote in this post last April, and Kessler now reinforces, Comcast is rightly worried about video programming disintermediation which will render its cable television product offerings nearly worthless much sooner than it had ever imagined. Even Google is sufficiently entrenched in the current technological environment to wish for its continued stagnation. When you're the largest guy on the block, and can intimidate everybody else, you don't mind if inward movement to the neighborhood is prohibited.
"We need policy to help cut a path for more competition, rather than protecting incumbents -- a Bandwidth Competition Act of 2008, not bogus net neutrality. All takers should be allowed access to poles or underground conduits. This is where neutrality should be enforced, instead of being a choke point.
Municipal or privately run wireless data services using Wi-Fi or WiMax should be sprouting like weeds. But they aren't being built because of lack of access to street lights, of all things, to set up access points. Verizon is busy rolling out a fiber optic service, FIOS, that will provide much higher speeds and real competition to Comcast. But it is slow going, as state by state video franchise rules still favor cable over any newcomers.
A stroke of a pen can cure these ills, incumbents be damned. They will adjust. I personally would climb telephone poles on my street to run fiber if I could get 100 megabit Internet service. Any takers? Talk about an economic stimulus; this is the type of infrastructure we need. The stock market will fund it all as well as resolve overbuild problems.
Don't think of Internet access as a static business -- someone put in phone lines 50 years ago or cable lines 20 years ago, and we are stuck with their limitations. Technology changes the game every few years. Even fiber lines put in today will be obsolete within 10 years and need upgrading. Same for wireless systems."
As a veteran of the last years of AT&T's crumbling monopoly, I can attest to all of what Kessler contends. Once access is opened, and bogus arguments for protecting whatever 'embedded base' is the focus of the particular technological debate, competition will blossom, and customers will be incredibly better served.
Once MCI opened the tiny crack in AT&T's armor by suing for the right to lease lines and resell them, thus arbitraging the dominant phone company's pricing policies against the real costs to serve customers, the end of AT&T was just a matter of time.
Like AT&T, Comcast's own infrastructure has a useful life, not an indefinite one. Its regulatory-granted monopoly made sense for the time at which it was granted, with the technology and market forces then in existence.
Things are different now, and the Federal and state regulatory schemes should acknowledge that by providing rules which favor customer benefits, not the maintenance of recently-enshrined oligopolistic market conditions.
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