EXAMINE THE NET WAY OF LIFE
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by Paul C. Pinderski
Location! is the mantra of realtors and retailers. A good location makes the opportunity to succeed easier than a bad location. A bad business model in a good location can tread water, but a good business in a bad location will drown in red ink.
In the two years since the gold rush stampede to grab web space, domain names, and B2B commerce centers, a new reality has set in. The crossroads of the internet are not physical streets, or suburban malls. The crossroads do not exist in the plain of general public perception. So the old business models do not work for major etailers.
You can have the best automotive web site. You can load it with prices, information, data searching, and 360 degree interactive graphics. But the consumer can't smell the leather seats, or see his reflection in the glossy clear coat paint. The consumer cannot test drive his potential purchase on the open road. He cannot see the the tach gauge pop when the wind whips his hair from the open sunroof.
So there are several major product purchases that require a tactile consumer response. Autos. Clothes. Homes. To name a few.
It is not that the web cannot generate sales. It is the type of sale that needs to be recognized. The web is an informational tool to educate, opinionate and formulate a potential buyer's viewpoint prior to the major product purchase. Catalog companies like Sears and Montgomery Ward spent decades in building up consumer trust in the products sold to patrons who could not get to their stores. Web sites are like the early catalog pioneers. It was a new means of distribution for known products. If a person was personally familar with Sears products, then that person was more likely to order products from the Sears catalog sight-unseen. Same for specialty clothes sellers like Land's End or L.L.Bean. People familar with their stores or products, are more inclined to order more items from their catalog than from an unsolicited etailer or emailer.
Just because one has a brand name, does not mean that it will be successful in the new distribution chain of net sales. Catalog companies earned their trust and loyal followers by providing consistent quality products, fair exchange or guarantee assurances, and the philosophy that the customer needs were paramount. One could argue that the rush to the web-tailers forgot these long known, but hard to achieve principles. The focus was on the business model, not the consumer need or reaction. Why was eBay successful? Its a consumer to consumer connectivity site, not a retail product sales site. The nitch is the consumer need to buy, well, other people's stuff, flea market-auction-garage sale style.
So opening a commercial web site is not like opening another brick and mortar storefront. It is not what you want to become, but what other people want you to be.
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Taxes & Death
by Paul C. Pinderski
Last issue I wrote that Y2K taught us that the US will spend billions on tech if it scared enough to think it will be left out in the cold. After Y2K fizzled, we were taught that the US will spend billions on tech for Internet infrastructure and developement if it is scared enough to think it will be left out in the cold. Big money. Glossy sites. Expected revenue windwalls. It didn't happen. Again.
There are conflicting surveys on whether the holiday e-sales went up or down. Some sites said they were up, others said they were down, but most of the numbers are jumbled into a parent's operating red ink that archeo-accountants will have to reconstruct the actuals many millions of years from now.
But one thing is certain in life. Death and Taxes. But in the fragile internet world, Taxes will cause Death. The federal internet tax moritorium has been extended two years to allow an equal playing field between net merchants and those of other interstate sellers, like catalog or phone order sales. It usually requires a physical presence in a state or locality in order to apply a tax burden on that merchant's sales. But local and state coffers are drying up in a faltering economy. The temptation to impose internet sales taxes on all internet sales is an easy solution to local problems. It should be avoided at all costs. It would be like throwing the commerce baby out with the sales bathwater. If one allows national net commerce to find its place in society, and businesses find their nitch places, the web income generated will be taxed, but on business income tax returns. It will not be double taxed, with the second burden on the purchaser, since it is the purchaser who actually pays the sales tax to the seller who turns it over to the taxing authority. Tax reformers have taken a stand in this new commerce frontier. What happens in the next two years may have ramifications beyond internet sales but on all interstate transactions. For good or ill.
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by Paul C. Pinderski
I do not have any inside information; but as a matter of disclosure I own of few shares of its stock. Apple Computer, the rebellious garage start-up of the personal computer industry and desk top publishing standard, has its important keynote convention on January 7, 2002 in San Francisco. There are numerous stories on Apple gossip and fan sites on the net. There is an underswell of major news. A breakthrough product or announcement. Apple's CEO, Steve Jobs, is good at the showmanship aspect of modern executive, 24/7 cable news, spin.
The web is a good place, well, breeding ground for Macintosh rumors. From the speed of its PowerPC chips, to new architectural improvements, to subcontractor order information, to new innovative style breakthroughs (remember the Cube?), Apple fails rarely to wow the industry media or the Mac faithful.
The Mac faithful are cult-like. More loyal than well-fed hounds, more dependable than rechargeable batteries, and more supportive than Revolutionary War minutemen in battle with the Torries, or microserfs. The Mac web communities have been a good platform for rumors, suggestions, comments, alpha-beta-gold master reviews and devine interventions. The sites, though Apple's legal department has a habit of speed faxing cease and desist letters, have their place in the overall company development process. The loyality and expression of the customers, in raw form, or in wish-list fashion, is a valuable marketing resource. And it is free.
Who knows, it could also inspire the R&D associates to create the next great thing.
This year is supposed to be groundbreaking for Apple. The company is beaten down by stock analysts. The business community is lock-jawed in the Intel-Windows world. The educational market is the current battleground. High end publishing and graphic companies prefer Macs to PCs. One would expect the ground to shake in one of the weak areas.
But if you want to go nuclear, the earth shattering story would be that Apple's latest operating software system, Mac OS X, is ready to run on Intel machines. Direct competition on Microsoft's sole domain. That would really grab the headlines more than a PowerPC chip running at 1.2 gig, the G5 next generation, or a new desk top line of boxes. A flat-screen iMac, the merger of a flat panel display and the Cube, would be the perfect desk space, cool looking office machine. Since the iPod, the MP3 player/hard drive, rumors have the company going more consumer oriented electronics. Could there be an iPad? A PDA that has the same form function keys of the iPod? That is a distinct possibility. But more probably, Apple's foray into the iMovie/iTune biz would be complete with a stand-alone DVD-R player that interfaces with its current software.
But if I had to predict one major story, it would be the porting of the Mac OS to Windows machines. For the past two years, no one has had a real reason to buy and new box, or to upgrade their software. But what would shake up the buying public more than a real choice for their current machines? What would get people into the computer stores to see how the Mac environment works on their workhorses.
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