Courage

I’m not a John McCain supporter but no one should underestimate the respect I have for this man. This video on his website tells an extraordinary story about an extraordinary man. I had no idea that he was on the flight deck of the Forestall during that terrible fire in 1967, and then amazingly transferred to another carrier despite injuries only to then be shot down over Hanoi. McCain’s mother seems like a real firecracker as well.

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Read more on Election 2008, Yamato at Wikinvest

Spitzer, Outrageous Even By NY Standards

When Eliot Spitzer was attorney general of New York I remember his comments about Hank Greenberg and Dick Grasso as some of the most outrageous I had ever heard from a state level official supposedly concerned about justice. If Spitzer were the DA in a county in North Carolina pursuing some lacrosse players he would surely have been disbarred by now.

While having no particular sympathy for either Greenberg or Grasso, Spitzer’s lust for power and pursuit of the governor’s mansion seemed so naked as to be almost embarrassing, but it was Spitzer flexibility about truth that was particularly offensive.

It appears that citizens of The Empire State are equally disenchanted with Spitzer, all the more ironic considering this comes as a result of a legal scandal involving abuse of power.

Even by the scandal-pocked history of New York politics, Eliot Spitzer’s fall from grace is extraordinary. A mere seven months into his term after a landslide victory, the Empire State’s brash new governor is openly ridiculed as a liar and worse. An astonishing 80 percent of respondents tell pollsters they want the governor to testify under oath to prove his claim that he had nothing to do with "troopergate," a dirty-tricks plot to smear Senate Majority Leader Joe Bruno, a Republican rival.

Deflation

I have been interested in pricing strategies for a long time. Quite frankly, pricing is one of the most misunderstood topics in enterprise software and also probably the single most non-optimized part of our business. Even in the consumer world pricing has remained one of the biggest disrupters and will likely to remain so.

However, what gets my attention today is the reflexive belief that we all hold that things should get cheaper over time. What is overlooked in many of these discussions is two factors, wages are rising fast in popular offshore targets China and India, and both countries have an abundance of unskilled labor but a shortage of skilled types. Interestingly, inflationary wage pressures are felt across the board and not just in the skilled set.

"Absent a deflationary debt contraction ( no certainty ) wage pressures in China and India are going to diminish the deflationary contribution we have gotten used to from those countries products. i feel quite certain that my golf shirts will cost a lot more in ten years."

If this means my next iPod, laptop or cell phone costs a little more I won’t mind all that much, but what are the economic effects of significant price increases across a broad section of consumer goods, combined with currency pressures felt through Congressional pressures on China to let the market determine the value of the Yuan?

"Two U.S. Senate committees have approved legislation that aims to equip Treasury with new tools to pressure China into letting its yuan currency rise faster in value, which U.S. manufacturers say is necessary to eliminate an unfair price advantage for Chinese-made goods."

Interestingly enough, we appear to be entering a new form of economic cold war with China. On the heels of threatening action by Congress over the currency, a high level Chinese official threatens to use their $1.3-1.5 (depending on who you talk to) trillion in U.S. dollar reserves ($900 billion in Treasuries alone) as a weapon.

Shortly after that we see a string of Consumer Product Safety Commission actions against Chinese products, are we to believe these quality issues surfaced only recently? I don’t think I am being a conspiracy theorist to suggest that this is an attempt to weaken demand for made in China in light of the ballooning foreign reserves and their stubborn approach to currency valuation.

On a related note, with regard to China and pricing, I recently linked to a piece suggesting that China’s crackdown on software piracy was intended to drive up the street price of Windows and make Linux a more attractive option for consumers and developers. Microsoft counted by cutting in half the price of Windows, but in order to do that will they be required to make up the loss somewhere else? Is deflation illusory?

Shifting from macro economic issues to consumer-centric, I read recently about Skybus’s pricing strategy. Skybus is a new airline that is launching with $160 million in venture capital and a unique pricing strategy that is best summed up as flying à la Carte. In addition to stripping out costs wherever possible, such as no 800 number and no in-flight entertainment, they are attaching a price tag to things we have long held to be "free" such as soft drinks and pillows.

Through a shrewd strategy of reducing costs AND exposing the true pricing components to consumers Skybus should be able to carve out a strong position among flyers who really don’t care whether or not they get a bag of pretzels. The point is, consumers look at these things as "free" when in fact they are most certainly paying for them.

Q: You’re even charging for checked luggage, $5 a bag.
A: If you don’t check a bag, why should you pay for those who do? We make our prices very clear, so we’ve had very few complaints. If you pay $80 for a Skybus flight instead of $180 for the competitor’s flight, and you pay $5 for a bag and $2 for a soda, that’s $87 versus $180. America can do that much math.

This obsession we consumers have with "free" is both irrational and illusory given that we intuitively know that we are in fact paying for something even if it isn’t coming out of our wallet at the moment of consumption. Having said that, can a web-based business succeed with a business model that requires consumers to pay up front for access? I’m not so sure they can because consumers increasingly expect things to be free.

Take this example of a site I found recently, Visual Thesaurus, a very clever adaption of the age old thesaurus to a slick visual user experience. I bounced to StumbleUpon’s discussion page about the site and the overwhelming majority of comments, in between the comments extolling the capabilities of the service, are from people writing "wish it was free" or "I love it but I’ll never pay for it". Let’s have some perspective, this is frickin $20 a year people, $3 a month… or put another way, 25% less expensive than one Starbucks grande latte a month.

I don’t have any answers, mostly just questions, but I think it is increasingly clear that one can’t rely on the common sense of consumers when pricing a service, and whenever possible creating the illusion of a free service should be considered a requirement. Having said that, I’ll be curious to watch Skybus to see if their transparency strategy with regard to pricing pays off.

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Read more on Deflation, Investing in China at Wikinvest

Blog Hiatus

As you may have noticed, I haven’t posted much these last few weeks. Aside from not finding much to be interested in with our industry in August, a traditionally slow month, I have also been tending to family matters and enjoying the waning days of summer. I am feeling energized and will resume my usual writing routine.

Perspective

Today I visited the Fox Cemetery in Berkley, Massachusetts where my mother-in-law and first son are buried. It’s pretty humbling to read grave markers with dates that not only pre-date the Declaration of Independence, but do so by several generations. I can’t even imagine the fortitude and dedication of purpose required to survive, much less prosper, in this part of the country in the 17th century. What would you do if there were no Starbucks, Internet, or air conditioning?

Great Design – Color Changing Faucets

We’re planning some more remodeling at the casa, bathrooms this time around. As has been the case with previous projects, I obsess about every detail and in the case of bathrooms this is a problem because there are so many design and product decisions that have to be made, accomodating budget and space constraints while at the same time ensuring that the most important rooms in the house are both utilitarian and aesthetic.

While doing my research I found a product that really blew me away with it’s design elegance and fantastic new function that achieves a really important benefit, especially for homes with small children. The company is Hansa and the product is a collection of color changing faucets.

The Hansacanyon series of faucets feature embedded sensors and LED lighting that change the color of the water from blue to red as the temperature increases. This is great design that puts function first through the utilization of new technology for an important safety benefit, all the while achieving that while still looking great.

As a side note, I’ve looked into a lot of bathroom fixtures, lighting, furniture, and tiles in recent weeks and I have to say that without a doubt the most amazing products are coming from German companies, with the Italians clearly having a significant edge in tiling but that’s not a surprise.

Reporters Not Being Reporters

okay, this is funny… actually it’s more funny than the parody site that spawned it and that was funny to begin with.

One problem: MSNBC’s article (since corrected) wasn’t exactly quoting the reverend’s personal blog at all: It took the passage from NewsGroper, a fairly popular parody site, which includes the words "Fake Parody Blogs" in the title bar of every one of its pages. The next time someone trots out the adage about bloggers not being reporters, we’re going to note that reporters aren’t exactly reporters these days either.

Tafiti

I’ve been using the newly launched Tafiti search service from Microsoft. Here’s a couple of observations:

  1. It’s beautiful, no question about that. Fast too.
  2. The underlying search engine feels less than Google, which in this day and age is the benchmark by which search is measured. I’d give it a Google .8 rating (a rating of 1 being as good as Google).
  3. I can’t use  the "find" feature in my browser.
  4. The Tree View is fun for about 7 seconds, then it becomes irritating.
  5. The News and Images category displays are very cool, I’d use Tafiti for news search alone. As good as News and Images are, the Blog Feed category was completely useless in terms of results and the way they are presented.

Tafiti is a great demonstration of the potential that Silverlight gives web developers but as a search service I’ll likely pass. User interfaces can’t hide the shortcomings of the underlying service, and they certainly should not get in the way of the service itself, as is the case here.

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Spiceworks – Sponsored Software

Spiceworks, in Austin is a provider of IT management software, their twist is that the software is free, paid for by advertisers and sponsors.

First a little background, network management is a key basket of processes in the modern enterprise, including tracking of assets, help desk, troubleshooting, and monitoring. This is the meat-and-potatoes work that IT departments undertake.

This sector has been dominated by large vendors HP and IBM (Tivoli) for years and the barrier to those products has always been cost, in short they can be really expensive. Startups in the call center software space have been abundant, and some like Motive (also in Austin) have been very successful.

The software suite that is expected to be delived by any company in this space is pretty well defined, in other words a company can’t compete simply on the basis of a slightly better feature set. Spiceworks is compelling because they provide the standard feature set but disrupt the competitive landscape by going out with a business model that goes to the heart of what prevents companies from buying IT mgmt software suites, cost.

The software application embeds Google AdSense in a sidebar, meaning you get ads served up while using it and advertisers gain access to a highly targeted segment that spend a lot of time in the applciation itself. We are increasingly accustomed to the notion that websites and web applications can be generating their necessary revenue through advertising, but this is an example of a downloadable application that is doing the same thing, and apparently it is working with over 120,000 customers to date.

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