Ged Carroll

Month: January 2012

  • The North Face and Nike

    The North Face and Nike on marketing

    The North Face seems to have just peaked on its cultural moment in Korea. The North Face jackets are worn by all strata of society. Below is a Korean blog post that compares Its winter coats with different types of high school students as the brand has become so ubiquitous in South Korean school yards and on the backs of consumers during the winter months.

    The bottom of the blog post goes on to compare The North Face with the duffle coats worn by previous generation of school children in a mocking way.

    it is as much the winter uniform of the Korean salary man as his tie.

    The North Face sees itself as a technical brand rather than a true luxury brand, but the vast majority of its jackets don’t see the mountains and ski slopes for which they were originally designed. It has begun to treat itself as a premium brand with its purple label retro designs and different fabrics like Harris Tweed – currently exclusive to the Japanese market. But how can this be maintained if the brand becomes this overexposed?

    It is not a corner that it can easily get out of and technical innovation in the clothing design will be of limited use.

    North Face overexposure

    Part of the problem is the nature of Korean society itself which has a certain conformity to it. This means that once a trend picks up, it goes everywhere. But then because it goes everywhere it has a finite life. A small amount of tastemakers move on and the cycle begins again.

    The next winter jacket might be Canada Goose or Moncler.

    Contrast this with Nike: The Wall Street Journal has an interesting article about how Nike and Footlocker maximised revenue from the Jordan franchise through careful timing of limited product releases. More marketing related posts here.

  • Zynga and the IPO

    I had held off writing on the ‘failed’ Zynga’s IPO at the end of last year. I am not going to say that Zynga is a great business; in many respects I don’t think it is, without even looking at its numbers I think that Zynga has three big challenges:

    • Facebook owns their customer base
    • Facebook owns their payment system
    • Facebook owns their customer acquisition strategy

    But was the Zynga IPO really a failure? Before I answer that I wanted to talk about another IPO.

    VA Linux IPO case study

    Back in 2000, I had the experience agencyside running the European launch of a company called VA Linux and took its then CEO Larry Augustin around the media. At the time VA Linux’s primary busness was building specialist workstations and servers were optimised for Linux and had Linux pre-installed. This meant that they thought carefully about component choices for instance the ethernet card (network interface card or NIC) in the computer was from Intel rather than 3Com because Intel did a better job in supporting Linux  in terms of the quality of its drivers.

    My experience of Augustin was of someone who was whip smart, with a dry wit and a genuinely nice guy – which made my job a hell of a lot easier to do. Life was good, Augustin gave good copy on the Judge Jackson finding of fact that had happened the previous November, Linux was building momentum in the enterprise and with web servers because it performed better than Windows, required less skill than the BSD distributions and was more of an entry level product than Sun Microsystems, SGI or IBM Unix hardware on specialised RISC architectures. One of the things that audiences wanted to talk about was VA Linux’s at the time record-breaking IPO.

    VA Linux’s underwriters had priced its IPO at US$30 per share, on the first day of trading the price topped US$320 per share. It was described as a stunning success but that success was double-edged. In economic terms, the bank staff working on the IPO had obviously under-priced it because the price had surged so much – depriving the company of a substantial amount of potential capital that it could have raised. Admittedly it was crazy times and VA Linux wasn’t worth the absurdly high valuation in the end, as businesses like Dell started competing with them head-on. But one has to ask what difference would the extra capital have made? How big does the pop have to be to go beyond rewarding initial investors and become negligent underpricing of a company’s stock?

    The Zynga comparison

    Back to Zynga, which had the opposite challenge, the bank staff working on the IPO had optimally priced the stock so that the company got pretty much the full amount that at least some people were prepared to pay. Rather than a pop, a price decline occurred which investors got upset about as late arrivals to the Zynga party made a financial loss. The underwriters for the IPO earned their money on this occasion. If you want to be the first kid on the block in a new set of the latest Nike Air Jordans, the latest gadget or the season’s must-have handbag, you have two choice get in early enough or pay over the odds. Who is to say if you’ve overpaid, once the heat goes those items are then likely to become cheaper again. And so it goes with Zynga, this shouldn’t be your pension fund; it is part of the new hotness, a fashion stock if you will and was priced and paid for as such.

    Disclaimer: this doesn’t constitute investment advice or a recommendation to buy stocks. I am not a financial services professional nor do I profess to be. If you want investment advice, pay someone who does this for a living for it.

    More information

    THE TRUTH ABOUT ZYNGA: The Only Reason The IPO ‘Flopped’ Is Because Idiot Investors Paid Too Much

  • Workampers

    The Wall Street Journal had an article that introduced me to the idea of workampers. The article was on the seasonal workers that Amazon.com uses in the US to help it with the surge in demand in the run up to Christmas.

    Who were these elves to Amazon’s Santa Claus?

    The article describes them as workampers. Older retired people who live a transient lifestyle by choice in an RV (recreational vehicle) for at least part of the year.
    CIMG1091
    Their motivations were diverse in nature. Some of the workers are similar to their ancestors during the Great Depression, who moved across the country following work were it was available.

    For others the reasons are diverse, from money to help with expenses to camaraderie with similarly nomadic peers or proving to themselves that they could still hack a task. A mix of forced earlier retirement and improvements in health mean that many seniors still have decades of potential work still in them that they want to take advantage of.

    A mix of ageism and globalisation have meant that there is a growing body of workampers. Future workampers might be in a worse financial state due to less generous pensions and health insurance, higher personal debt and automation. The move to a lower carbon economy will also impact the ability of a workampers to live out of an RV and transverse large distances at a reasonable cost.

    Workamper futures

    With an aging population and the decimation of working class communities due to the opioid epidemic we are likely to see more demographics like workampers as companies adapt to tap into an older work pool. With Amazon in particular, one has to wonder if more of their warehouse and logistics work can be automated and how it will be affected by a low carbon future.

    More explanations of of jargon terms can be found here.

    More information

    Seasonal Amazon ‘Workampers’ Flock to Remote Towns for Temporary Gigs – WSJ.com (paywall)

  • Consumer interest in iOS etc.

    If you’re like me you read far more journalist analysis of the wireless phone market than is good for you. I thought that it would be instructive to have a look at what consumers are looking for instead and look for any patterns. After sales availability and visibility consumer interest is probably the biggest determinator of success. My weapon of choice was Google Insights for Search. My research was based on a few assumptions about consumer interest in the wireless space and some limitations in the tool that I was using:

    • Consumers know what type of smartphone that they want
    • Consumers decisions aren’t carrier loyal
    • Consumers used Roman script to search for the brand
    • Search is a good proxy for consumer interest – it hasn’t been disrupted by Facebook in this regard yet despite what others may tell you
    • China despite being the world’s largest market isn’t going to be providing meaningful data because Google Insights for Search doesn’t cover that market
    • The Russia sample is indicative of overall consumer sentiment in Russia (Yandex is a big search player in Russia)

    Consumer Interest in platforms
    Some of the biggest interest in handset brands is in the developing world. In many respects this is their PC revolution. In developed Asian markets like Hong Kong and Singapore there is a much higher interest than EU countries – partly because of on-the-go lifestyles and partly because of the economic cataclysm that the western world is facing. The iPhone still attracts the most interest, but what is interesting is the acceleration that Android seems to have in terms of increasing interest. Microsoft’s efforts, whilst lauded by critics haven’t yet turned into consumer interest.  Research In Motion’s Blackberry platform seems to be down but not out yet in the consumer stakes.

    Nokia

    I took a snapshot of consumer interest in Nokia over the past three months to try and see what effect the global launch campaign for Nokia’s Windows phones are doing to consumer interest in the brand.

    I deliberately didn’t compare them to the iPhone because Nokia themselves acknowledge that they are competing against Android handset makers like HTC and Samsung. Nokia launched the Lumia phones with their biggest marketing campaign ever and had a lot of column inches written about the brand alongside a gamut of marketing commnications tactics from experiential events and advertising to point of purchase.


    Whilst Nokia’s new range of Lumia phones have had a substantial marketing budget put in place, but it doesn’t seem to have significantly affected search interest: it’s not quite living up the Amazing Everyday billing yet. This is also the case for Windows Phone with interest remaining consistently low in comparison to the Nokia brand. I think that the stubborn consumer disinterest in Windows Phone is a big challenge.

    More wireless related content can be found here.

  • Lean web development + more

    This is more of a wish list of what changes I’d like to see in technology and related areas in the next 12 months. This is based around a number of concepts, a few of which are lean web development, security, SSD pricing, better product design and service breakouts.

    Lean Web Development

    Lean web development. This have gotten ridiculous when the average size of a web page is now 1MB. It adversely affects page load times and assumes that bandwidth for the end audience is limitless, which is a fallacy when you have mobile broadband caps and telecoms providers looking to meter broadband use moving forwards. Lean web development recognises that wireless and wired networks don’t provide the kind of limitless low latency broadband technologists assume exists. It might be about turning the approach to web development on its head and developing for mobile devices first and then adding on content or features depending on the device rather than trying to hyper-mile existing web technologies.

    Security

    A more secure web. At the base level an increased awareness of security: why do companies store credit card details or personal information in unencrypted files? At an architectural level:

    • Re-secured DNS and SSL certificates
    • Secure VPNs over IP v.6 networks
    • Effective IP address and system configuration masking to protect from privacy intrusions and badly executed behavioural advertising

    SSD price decrease

    The price of solid state drives (SSDs) to fall so that they can be used on my MacBook Pro as the primary storage drive for my life. At the moment whilst devices like the MacBook Air are attractive. they don’t have enough storage capacity and act as an adjunct or special purpose personal computing device. At the present time that just isn’t possible. Cloud is interesting as an idea, but the reality of networks doesn’t make it as practical as people seem to think.

    Design

    An increased appreciation of ergonomics in device design. In the mid-90s I had an Apple PowerBook which came with legs that flipped around to angle the keyboard at an optimal angle for typing. My current MacBook Pro doesn’t have any kind of similar feature. My iPhone feels too wide in my hand as a phone and my iPad is awkward to hold. And I haven’t even started into a rant over the pictures under class interface and soft keyboard of the device with no haptic feedback.  Part of this is down to a size-zero aesthetic design obsession and interface designers per-occupation with the Tom Cruise film Minority Report – but its making designs that are not particularly human-friendly and leading to poorer product performance.

    A move away from general purpose technology hardware and smartphones to focused designs. Convergence has been a watchword in hardware and software design. A less positive spin on this is bloatware. In hardware that has meant personal computers and smartphones. The personal computer is currently being challenged for dominance by tablet devices which only use a fraction of the computing power available. Why is it that Microsoft Word only allows me to write as fast in the latest version for the Mac as Word 5.1 which was released two decades ago? It is ironic that smartphones like the Apple iPhone can do a range of great and trivial tasks, but are quite poor at being a phone. Dropped calls, poor call-quality and a form factor that still feels a bit too wide in my hand as I hold it to my ear – it is a great example of being a jack-of-all-trades but master of none. Whilst a Swiss army knife or Leatherman tool is useful at a pinch, you are still better off doing the job with the right tools if available. With software or digital services space and weight aren’t an issue, yet we have products that have overloaded awkward functionality that leads to a poor user experience. By all means get different things to talk to each other: iftt provides a great template for how that should look; but don’t try and do all of those things on the one user space. 37Signals ethos to become the norm, rather than the exception.

    Service break out

    One of the Chinese services like Sina.com’s Weibo crossing over and giving Twitter a run for its money. Sina.com have kept innovating with their product getting ahead of Twitter and innovating in terms of the user experience. A side benefit of compliance with Chinese government legislation has meant that they seem to do a good job on spam as well.

    Wireless choice

    A clear idea of what on earth is happening with Research in Motion | Intel | Sony in the mobile space and excellent differentiated products to bring some choice back into the wireless world rather than more of the same. The wireless device industry is starting to exhibit some of the dynamics of the PC industry: with ARM and Android being the Intel X86 and Microsoft Windows of the handset world, with Apple doing their own things. Costs are coming down but innovation only seems to look like what Apple does at the present time. There is a reduction on the types of form factor designs and interaction methods.

    Media

    The return of Geek Monthly. This was a US publication that I came across in Hong Kong. It’s publisher filed for Chapter 7 bankruptcy, but it got picked up by a new firm looking to get it back on the road. Hopefully they’ll succeed. This Current TV programme should give you an idea of what to expect: