Archive for November, 2012
Another great chart from Horace Dediu at Asymco. He looks at the advertising budget of Apple, Samsung, HP, Dell, Microsoft, and Coke. Why include Coke? Because it’s a huge advertiser, and its “primary cost of sales is advertising.”
As you can see, Samsung is blowing all the companies away in advertising and marketing.
Not a bad price to pay, if it means you get to become the world’s biggest smartphone company. Certainly HTC wishes it had Samsung’s marketing budget.
NPD research published some horrible news for Microsoft yesterday.
- Despite releasing an entirely new operating system on October 22 of this year, Windows PC sales shrank 21% between 10/21 and 11/17 versus the same period last year.
- Windows 8 tablet sales during that period were “almost nonesistent” – just 1% of all Windows 8 sales.
“It hasn’t made the market any worse, but it hasn’t stimulated things either,” Stephen Baker, an analyst at NPD, told the New York Times. “It hasn’t provided the impetus to sales everybody hoped for.”
Yesterday, we reported other bad news:
- Asus CFO David Chang’s comments that “demand for Windows 8 is not that good right now.”
- Microsoft cut its order of Surface tablets for the year to two million units, down from four million.
This is a very scary time for Microsoft.
Mobile apps are no longer just for an American audience.
According to Flurry, the U.S. share of Android and iOS app sessions shrank a remarkable 19 percentage points in the past year. U.S.-based sessions now account for less than one-third of the total. The next nine largest markets soaked up much of the usage, increasing their share 12 percentage points to 39 percent of app sessions.
While the U.S. is still the most profitable market for app makers, developers need to start turning their eyes toward the global market, where much of the growth in mobile apps will occur as smartphone penetration slows in the U.S. and other early adopter markets.
And it’s completely charming.
The company started the quirky campaign in March of this year with a commercial that suggested IE was the browser you used only to download another, better browser. That spot, from CP+B, featured a guy ignoring his up-for-it girlfriend while he tried to uninstall Explorer from this PC. (The joke, for non-nerds, is that you cannot uninstall Explorer from a Windows machine.)
In the new commercial, a basement dwelling geek — signified by a lava lamp, an ET doll, double screen setup, etc. — attempts to troll Microsoft by repeatedly leaving the message “IE SUCKS” on comment boards and Twitter.
The company responds by extolling IE10’s virtues, including “IE adopts an island of kittens and donates them to children everywhere!!!” Check it out:
As the world’s largest online retailer, it’s no surprise that its biggest fulfillment center in Phoenix, Arizona is the size of 28 football fields.
That’s because it’s their goal to have everything anyone wants at anytime.
Amazon has 80 fulfillment centers in the world to handle all of its orders.
Even though Amazon already has massive operations, it’s still planning to open at least two new fulfillment centers in California over the next year or so.
And with the holiday shopping season in full force, Amazon hired an additional 50,000 employees to help with the expected demand.
Thanks to Imgur user SippingTea’s incredible photos, we have a sense of that this incredible scale actually looks like.
Stacks of shelves line the warehouse
Employees need carts to navigate through the massive amounts of inventory
Hundreds of boxes full of products cover the floor
The daily deal world is in turmoil.
LivingSocial just announced the firing of 400 employees, which is about 8.9% of its total workforce.
What’s more unnerving is that over the past six months, Groupon reduced its workforce by 648 positions.
More than 1,000 reductions across both businesses is a huge deal. Those reductions aren’t all layoffs; some are through attrition.
To cap it all, Groupon CEO Andrew Mason’s job was in question all week, and he only received his board of directors’ seal of approval late Thursday.
So why isn’t anyone freaking out yet?
Arguably, this is a recession in the daily deal business.
It’s the industry’s first, given that it didn’t exist until about four years ago.
LivingSocial told Business Insider via email about the job cuts. “After two years of hyper-growth from 450 to more than 4500 employees, these moves will align our cost structure against our 2013 plans and will help us set the company on a path for long-term growth and profitability. Specifically, they will allow us to invest more in critical pr! iorities like marketing, mobile, and the hiring of additional technology staff.”
LivingSocial told CNNMoney that it is moving much of its customer service from its headquarters in D.C. to Tuscon, “so some job openings will be available in that area.” Sales and editorial, however, have simply been “streamlined.”
The job losses reflect the shaky economic underpinnings of the daily deal business, which Groupon and LivingSocial have yet to wrestle into control.
LivingSocial posted a net loss of $566 million in Q3 2012. $496 million of LivingSocial’s loss stems from a huge writedown of some of its acquisitions from 2011, the Washington Business Journal reports. LivingSocial’s revenue also fell to $124 million in the three-month period, down from $138 million in the second quarter.
As of market close today, Groupon’s stock price is currently sitting at $4.54, according to Yahoo Finance. The 52-week range is shocking: it reached a high of $25.84. That followed six months’ of shrinking total billings at the company. (Its American business is robust; the international arm less so.)
A Groupon spokesperson tells us that its layoffs were largely due to new technology the company invested in that made those jobs irrelevant. In fact, we’re told, Groupon has 200 job vacancies open across North America right now.
And, of course, the job cuts don’t mean that Groupon and LivingSocial are going to vanish tomorrow. They’re huge businesses after all. But they are cause for concern as they illuminate potential weaknesses in the daily deal ! business model.
The main problem is operational scale.
Both companies are dependent on large salesforces. It is very difficult for them to leverage operation scale: To sell more, they need to employ more people. Groupon historically has prided itself on the long-term relationships its salesforce builds with its merchants. They have struggled to leverage self-serve, turnkey sales the way Facebook has.
In fact, Groupon and LivingSocial aren’t even tech companies. Rather, they’re email companies. Although email is here to stay for a long time, the tidal shift among consumers is away from email to instant messaging, social media messaging, and mobile phone messaging. They need to pivot into alternate methods.
Groupon is trying just that, with Groupon Goods, which so far has been a success. And both companies need to do what Groupon says it is trying to do, which is replace human-to-human selling with tech that can increase each individual worker’s selling power.
Lastly, the downturn ask whether the daily deal business has hit one of its natural ceilings: new merchants. Both companies need a fresh supply of new merchants to offer more deals, or to re-up on repeated deals. It’s an open question that both Groupon and LivingSocial now have to prove: Is there enough new merchants or incremental repeat business from merchants for the sector to continue to grow?
A thousand-plus layoffs suggest that, for now, the question lacks a satisfying answer.
Don’t Miss: Groupon CEO Andrew Mason Keeps His Job!
Could we be seeing the end of routine doctor visits?
Scientific American reports that researchers are testing a new system for electronic doctor visits that could potentially eliminate the need for patients to see a doctor for routine illnesses.
Patients would simply enter their symptoms and health record into an online system, and doctors would use this information to send a diagnosis and, when necessary, a prescription.
Early reports suggest that such diagnoses were just as accurate as those given in person, although there are still some kinks that need to be ironed out:
Researchers analyzed some 5,000 doctor visits for sinus infections and 3,000 visits for urinary tract infection. Less than 10 percent of all visits were electronic. One possible e-visit drawback: doctors were more likely to prescribe antibiotics after an e-visit than a face-to-face.
But patients with an e-visit had just about the same rate of follow up as those who had an office visit. Which suggests that there was not a higher rate of misdiagnosis or treatment failure online. E-visits were also cheaper.
Detractors will note that this program only applies to relatively routine illnesses, but even so, this is nothing to sneeze at.
One of the primary goals of Obamacare was to cut down on the use of expensive emergency room visits for routine medical care, which was clogging up emergency rooms and leading to millions of dollars in unpaid medical bills. This looks like a much cheaper and simpler way to accomplish the same thing.
Naturally, we’ll need to see more studies before these programs can be rolled out on a national scale, but this looks like a good place to start toward improving the ! efficien cy of the health care system. Massive, top-down reforms like Obamacare get most of the attention, but it is smaller innovations like these will do the most to shape the healthcare of the future.
It also seems clear that letting consumers benefit from cheaper prices is a way to push the health care system as a whole toward less costly methods. E-visits for routine problems (and ultimately, perhaps, e-visits to nurses rather than to physicians) can offer better, faster, more convenient service at a lower price. Moving in directions like this is the kind of health care reform we desperately need.
Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.
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