The Integrative Stream

Intel Bunny Rabbits

“Intel Inside” is gone. “Leap Ahead” is here. “Intel Inside” was one of the more brilliant branding campaigns of our time. “Leap Ahead” will not be. That’s a safe prediction for 2006. Happy New Year!

Skype Model

I just purchased Skype calling credits for the first time. I’m doing some work with a company in New Zealand, and international calls at two cents a minute just make sense. I’m a little behind the curve on this technology, since I have a perfectly good speakerphone and a nice calling plan. As you might imagine, it’s pretty popular at MIT, particularly with the international student body.

But how do they make money (or, rather, how did they plan to before eBay bought them)? The margin on international calls, at 2 cents a minute, can’t be that high. Actually, it looks like a lot of the revenue might come from people losing interest: calling credits expire if your account has been inactive for 180 days. I wonder what the attrition rate is.

Update: I used it for an hour long conference to New Zealand yesterday. Voice quality was excellent, and the person on the other side (talking on his landline) didn’t even notice I wasn’t on a regular telephone. Total cost for the call: $1.07.

Attack of the Suits

My friend David from MIT’s Center for Media Studies made an interesting post last week on Why It’s More Than Just Courteous to Play Nice With “The Suits. David covers the games industry, so that’s where his focus is, but the point is actually much broader. I’ve seen the exact same prejudices in enterprise software shops - and that boggles the mind.

Actually, the situation is a little different. Enterprise developers aren’t quite as likely to have an independent vision, but they’re just as likely to assume they understand the customer better than the “sales droids.” Sometimes the results are pretty comical - and sometimes the developers are right.

Federal Budget Games

Merry Christmas, Alaska. The Bridges are Back. Congress didn’t actually remove funding for Alaska’s two “Bridges to Nowhere.” They simply removed the requirement that Alaska use the $454 million in allocated federal funds for the bridges. And sure enough, the Alaskan state budget has now allocated the money to the bridge projects.

Now, I’d be willing to accept that there might be a little more to these projects than saving 8,000 people a seven minute ferry ride to the airport. I’d buy an argument that building at least one of these bridges will stir economic development in the affected areas. I’m not sure if it’s $223 million worth of development (the cost of that particular bridge), and nobody seems to be visibly making that argument anyway.

As we saw with the attempt to stick ANWR drilling into the end of year defense budget, the federal allocations process is thoroughly broken, and has been for years. The country has grown so much that a “one issue, one bill” policy is patently impossible, but there must be some way to keep bills at least generally focused. Too bad a line item veto would be so prone to political misuse.

Live vaccine against bird flu (in birds)

China develops first live vaccine against bird flu. It can be delivered orally, nasally or by injection. It can also, apparently, be sprayed.

I am not a virologist; in fact, I’m not anything even remotely like a virologist. So I have to wonder: is spraying a weakened version of H5N1 all over the place a really good idea?

Kids These Days

Just bought a latte at my local Starbucks. The customre ahead of me tendered a $2 bill for payment. The teenager behind the register had never seen one before, and wanted to know if it was real. She consulted the twenty-something behind the other register, who didn’t know either. Finally, they consulted me, and I authenticated the bill for them.

Although, to be fair, I haven’t seen any $2 bills in a long time, so it’s now entirely out of the question that a teenage cashier wouldn’t have seen them. There are so many more currency options than when I was a kid, anyway. As a teenager, I paid cash. Now, not only have credit and debit cards worked their way down to the tweens, it seems that every major retail chain has launched a swipe card program. There’s enough economist in me that I never saw the point of those things. After all, they’re just like cash - but worse.

A La Carte Cable, Take II

One other thought about a la carte cable channel pricing. As mentioned below, I don’t watch ESPN. And yet, it’s one of the most expensive cable channels out there on a per customer basis. I’d be willing to pay not to get it–that is, I’d pay the cable company whatever their margin on the ESPN channel is as long as I didn’t have to pay the $2.50 that Comcast then pays on to Disney. Of course, this means ESPN might get more expensive for the people who watch it,as Disney scrambles to cover the cost of licensing football games, but that’s fine: they watch it. No reason for me to subsidize them.

Family Friendly TV

This week, the Integrative Stream finally dives into the culture wars! Just kidding. However, I’ve been watching the coverage of the proposed new “family friendly” cable TV tier (link is to WSJ.com, subscription required) with a passing interest.

From a consumer perspective, I loved the original proposal, which was to provide a la carte, channel by channel, service to customers. There are only about three cable channels I watch regularly; the $2.50 a month on my cable bill for ESPN is, from my perspective, a total loss. Bundling means I’m paying a lot more, which, of course, is the point. The bottom line is that I don’t care where proposals come from as long as they’re consumer friendly.

But there’s another issue, largely ignored in the broader discussion of what’s “family friendly.” Sex and violence are out, of course. But what about religion? A few years ago, the cable company around here offered to block individual channels that viewers found offensive. This was when the Family Channel was broadcasting the 700 club, Pat Robertson’s TV platform, and an openly gay friend of mind called up the cable company and asked them to block the channel as he found the show offensive. I’m not sure what happened, and this wouldn’t be an issue with a la carte pricing: if you don’t want to pay for fundamentalist broadcasting, you wouldn’t have to. But it is an issue with bundled services: frankly, the only bundle that would be morally acceptable for everyone would be one consisting of the Weather Channel and, well, that’s about it.

Happy News?

A CNN article pointed me to HappyNews.com, which features only, well, happy news. Since I prefer not to stick my head in the sand when things go badly in the world, I’m not all that excited by this particular innovation. However, I did smile when I noticed that one of their “happy” stories was about galaxies colliding with each other. Apparently, destruction on a cosmic scale makes some people happy.

So just who are these entrepreneurs?

Jeff Cornwall provides A Definition of Entrepreneurship at The Entrepreneurial Mind and apologizes for not having gotten around to it sooner. It’s a pretty good defintion, so go read the post.

The economic history of entrepreneurship is an undertreated subject. When I was an undergraduate, I did dual majors on Economics and History. It’s a fascinating area, and I was a little surprised that out of 1,200 undergraduates I was the only one my year who chose to do that. While I put my nascent career as an economic historian on the back burner, I did write a seminar paper on Adam Smith and the concept of entrepreneurship, the gist of which was that (a) Adam Smith never used the word and (b) when he alluded to entrepreneurs it wasn’t respectfully.

The word itself, as far as I can tell, goes back to Richard Cantillon in the 1730s, and the concept another century. Smith tended to use words like “projector,” which is just a breath away from “speculator.”

Nothing Left to Outsource?

It sounds like there’s nothing left to outsource. According to the New York Times, Americans are now outsourcing video game playing to China. And it’s big business.

This says something about our society, but I have no idea what.

Coke Branding and Line Extensions

The notsocommoncents blog asks Is it too late for Coke? Worth thinking about - Coke’s market share has been declining, and their core business is purely branding. As I learned a few weeks ago, brown fizzy water is brown fizzy water, regardless of whether or not it’s in a Pepsi bottle or a Coke bottle. After all, if there was a real difference restaurants would serve both. I’ve yet to find one that does. The company needs to get the buzz back.

However, the Coca Cola Company has seen a success lately, in Coca Cola Zero, which may turn out to be a textbook example of how to get a brand extension right. I haven’t actually seen the sales numbers, but by retaining the Coca Cola name they created a drink that consumers associate with the core product, rather than with Diet Coke. My highly unscientific survey, based on the contents of the soda machine on the third floor of the MIT Sloan School of Management, shows Coca Cola gaining share at the expense of Diet Coke.

Anyway you look at it, this is not a bad thing. My local Star Market does not discount Coca Cola Zero the same way they discount Diet Coke. Since I started drinking it, I’ve been spending more, so somewhere in the value chain margins have gone up. This is true for converts from Coca Cola, too. Actual new sales (from people who didn’t like Diet Coke and didn’t like the calories in regular Coca Cola, and brand-switchers) are gravy.

This is all a bit speculative since I don’t actually have any numbers, but I there are two fundamental lessons here. First, extend your brand into areas that make logical sense. Second, cannibalizing your own sales is a good thing - if you can shift the consumers to something with a higher margin.