July 2007 Archive
Barbie and the Bratz girls are preparing to duke it out on their new social networking sites, according to a Wall Street Journal article this week. The Barbie site is in Beta now and the Bratz site is set to launch in August. Both promise virtual shopping at the mall, virtual personas (or avatars), virtual makeovers, and perhaps real friendships with other logged-in members. The companies hope their sites gain traction like adult virtual community Second Life (which also has a teen site); some users find the sites to be very addictive.
To be honest, I’m surprised that it’s taken this long. From a pure marketing standpoint, what better place to showcase your products while encouraging girls to shop? Virtual dollars can easily be converted to real ones in the off-line world using allowance or babysitting money. One competitor already capitalizing on the tween market is Webkinz; kids can access the Webkinz online community after purchasing one of the plush animals (the site has become so popular, in fact, it’s led to this problem). Although pitching products in these communities is not as easy as it sounds, as marketers who opened stores at Second Life are finding. (For more on corporate outposts in Second Life, see my colleague Patrice Sarath’s earlier post on the topic.)
In the WSJ article, the CEO of MGA Entertainment (owner of the Bratz brand) says that any similarities between the two sites are a coincidence and that he’s never visited the Mattel site. I’m not sure this is wise – isn’t it part of the CEO’s job to check out the competition? Maybe he’s just trying to avoid yet another lawsuit. The two companies already have their lawyers busy with multiple suits, accusing each other of stealing doll ideas.
It could be that the very girls they want to attract are already busy with other communities such as Webkinz, Club Penguin and Whyville. As this blogger puts it, for today’s youth, “concepts like Second Life will seem like second nature.”
Other than being a top money winner on the Professional Tetris Players Circuit, my dream job would be CEO of a semiconductor company. Those guys pull down the big bucks, they get to make cool products, and they’ve got incredible job security.
Take these two dudes: Brian Halla of National Semiconductor and Jerry Fishman of Analog Devices. Both have held their CEO posts since 1996. You can quote your Shakespeare, “Uneasy lies the head that wears the crown,” but I’m betting those guys sleep real good at night.
Intel is famous for having had only five CEOs in 39 years. John East has been the CEO of Actel for more than 18 years. Man, that’s sweet. You’d think his job is secure, but Actel is one of those companies that are reviewing their historical practices in granting stock options, and those reviews can result in dire consequences for CEOs, as David French of Cirrus Logic found out.
In the past year, though, Silicon Valley has seen two founder CEOs brought down. George Perlegos of Atmel was fired by his board after leading that company for 22 years. The board cited his alleged misuse of corporate travel funds. A special board committee also found evidence of backdating in past stock options and laid blame at the feet of Perlegos. Of course, he had already been fired and chased off the board, so there wasn’t much more his former fellow directors could do to him.
Jack Gifford retired as chairman and CEO of Maxim Integrated Products at the end of 2006, ending a 23-year reign. The official line was that he was retiring for health reasons. His health had suffered after six months of reviewing past practices in granting stock options, including an informal inquiry by the SEC and a subpoena for records from federal prosecutors. After a special board committee concluded in early 2007 that there had been some hijinks with stock options over the years, Maxim’s CFO resigned and Gifford retired from the part-time advisory post he received after stepping down from the board and senior management.
Come to think of it, I’ll restrict my aspirations to the Tetris tour.
As a parent of two girls, ages nine and 12, where else would I be at 12:01 a.m. on July 21, 2007 but in a bookstore? Along with hundreds of other adults – and many more children decked out in Hogwarts‘ regalia – I was at a Bookstop in Austin, Texas, nibbling on Live or Die cookies (I chose Live!). I was eagerly awaiting the opportunity to grab a copy of Harry Potter and the Deathly Hallows, and get out of there as quickly as possible. Actually, it was a lot of fun and despite a frenzy building toward chaos as the magic hour approached, we got our copy at 12:09 and headed home. (I went straight to bed but my 12 year old stayed up until 2 a.m. – not her usual bedtime – reading.)
Judging by the sales figures and massive media coverage, we weren’t alone. According the book’s US publisher Scholastic, some 8.3 million copies of the 784-page tome were snapped up in the first 24 hours, exceeding the 6.9 million copies that Harry Potter and the Half-Blood Prince (book six) sold in its first 24 hours on the market. Scholastic has printed 12 million copies of the 7th and final chapter of the Harry Potter saga. The book’s UK publisher Bloomsbury Publishing, reports that the series (prior to the release of Deathly Hallows) has sold some 325 million copies worldwide .
By now, I bet most hard-core Potter fans have finished the book and know Harry’s fate. My daughter finished reading it by Sunday evening and had barely closed the cover when I took it up (I finished chapter three last night and it was a wild ride.) Judging by my child’s reaction and J.K. Rowling’s success with the first six books, I don’t expect to be disappointed. For fans who have finished the book and want to discuss it — and everything Potter related under the sun — Mugglenet.com is the place to go.
Here’s the scenario: Farmers grow corn, the corn is sold to dairy farmers as feed for cattle, which then produce milk for human consumption. But corn farmers are getting higher prices for their crops from ethanol plants, which means that the dairy farmers must pay more for feed and thus charge more for their milk, cheese, etc.
Makes some kind of sense, right? So while the subsidized ethanol boom, led by companies like ADM and VeraSun, may help us spend less money on petroleum products, it is unfortunately creating negative impacts elsewhere on American consumers’ lives. (However, it is a positive turn of events for farmers, who have long struggled with low grain prices.)
Other affected commodities include corn-fed beef and chicken, grain cereals, corn tortillas, and sodas containing corn syrup. Of course, as we all know, the rising price of energy in general is elevating the price of just about everything that requires fuel for processing and shipping. Other possible factors include higher export demands and a draught in Australia.
Overall, the implication that ethanol may be making more negative waves than positive ones must be examined. It’s hard to predict how long Florida’s weather will affect citrus prices. It’s also challenging to know how long we will be wincing over $4 a gallon milk. But unlike weather patterns, the amount of ethanol produced can be controlled. It seems that dairy farmers themselves may not even be benefiting from the trend.
The dilemma could be solved by corn farmers planting more rows in future years, but this may in turn impact the price of other grain crops that are sacrificed in the process. While I believe that biofuel production is a step in the direction of solving our energy crisis, I’m not sure that ethanol should remain the #1 US alternative fuel — especially when so many questions about its impact on consumers and the environment are unanswered.
Consumer 101 teaches us that monopolies, duopolies, and any other -opolies are bad things, and it’s true. Just ask me, a football fan living in a city ruled over by Time Warner Cable. The firm’s refusal to carry the NFL network means I miss football games, and me no happy when I miss games.
Government 101 also says -opolies are bad. Business 101 is forced by law to agree, even though every business would love to have no competition. Usually corporate consolidation is bad for the customer, limiting our choices. But what happens when consolidation turns and bites those big companies on the assets? Look no further than the rather dismal music industry to find out. (For deeper analysis on the music industry than I can provide through my sporadic rants, see my colleague Lee Simmons’ posts.)
For more than half a decade, music publishers Warner Music Group and the UK’s EMI Group have been trying to combine forces, and this week the flirtation finally ended when Warner Music officially let the regulatory deadline pass to make a bid on EMI. Instead, private equity firm Terra Firma has struck a deal to buy EMI for $4.7 billion.
Had EMI and Warner Music merged, it would have taken the major players in the music industry from an already paltry four (Universal Music and Sony BMG are the other two), down to three. So, why wouldn’t a stranglehold on the market by the remaining three biggies have been good for their wallets? Because none of them has any clue how to update their business models to sensibly compete in the digital world. They would be huge companies, but all it would mean is they’d shake the ground harder as they stumble around the CD rack while all their customers are at home jamming on the computer.
The music industry has been in a slow and steady tumble ever since it decided to walk the confrontational path with its war against Napster and other media file sharing technologies. (CD sales are already down 20% in the first half of 2007.) Rather than work with technology to find a solution agreeable to everyone, the music biggies decided to sue, shut all the services down, and drag individual consumers into court: everyone from the tween downloading a Britney Spears song to a tech-savvy grandma grooving to her Lawrence Welk.
There’s some evidence that the industry might be wising up by delving deeper into ancillary services such as talent management and concert promotion, but that won’t help any time soon. The Big Four have to find a way to charge more for individual song downloads, but so far Apple has refused to cooperate and won’t charge more than 99 cents a song.
Disney’s music label has come up with one of the better ideas lately. They plan to enhance the features of traditional CDs to include tons of video extras, digital lyrics and photos, etc. It will help for old school people like me who still enjoy having album cover art and CD booklets. I think artists should be paid for their music (it’s their job, after all, much as I don’t write this blog for free), but anyone born since the mid-80s disagrees, and that won’t change anytime soon.
So keep dancing, guys, just try to stop doing it in place.