Author: Paul Wallbank

Paul Wallbank is a speaker and writer charting how technology is changing society and business. Paul has four regular technology advice radio programs on ABC, a weekly column on the smartcompany.com.au website and has published seven books.

Apple and the recession

A couple of weeks ago I gave my opinions why Apple shouldn’t chase the Windows market down the cheap netbook path. Philip Elmer-DeWitt’s makes a similar comment on his Fortune blog quoting Turley Muller’s analysis of Apple’s prospects.

The big challenge for all businesses in this downturn is to focus on core values and products. For a company in Apple’s position, to be distracted by a venture into low margin, cheap products would be a terrible waste of management time and resources.

There’s no doubt Apple will be affected by this storm, they are going to lose sales and profits will suffer. The key to survival is to limit that damage and come through the other end with loyal customers and good products.

Control freakery

Further to my earlier post about Apple pulling out of Macworld, CNBC opines they are doing it so they can control the messages, to quote;

The fact is, Apple hosting its own events gives the company complete and total control over its own message. More and more companies are leaving traditional trade shows in favor of enjoying the total spotlight at their own events. I’ve reported recently that some big names are either dramatically reducing, or exiting all together, the massive Consumer Electronics Show in Las Vegas next month.

If this is true then it’s a shortsighted policy by Apple and anyone else that thinks this way. The days of total control has passed, if it ever existed.

Apple leaving Macworld

Apple’s decision to leave Macworld is strange and disappointing.

Macworld gives Apple a captive audience of dedicated fans. Any other business would kill for the same opportunity to roll out their new products to such an enraptured audience.

While there’s not doubt the Internet and the Apple Store channels have diluted the importance of the trade show, the Macworld event is still an important part of the tech industry’s calendar.

I’m a bit baffled why Apple would be doing this, I think it’s an asset they should treasure.

Why you shouldn’t use Internet Explorer

Why you shouldn’t use Internet explorer

Last week’s zero day exploit is just getting worse and wise heads are advising users to ditch Internet Explorer.

This is good advice and I expand on that on the IT Queries site today with some alternatives to IE.

I tied the zero day exploit into my Smart Company column on Tuesday. It illustrates why you shouldn’t be diving on to the net straight after starting your computer from a two week break.

Web 2.0 is dead?

Tim O’Reilly’s Twitter feed put me onto Peter Schwartz’s Death of Web 2.0 article.

It’s an interesting idea the future of web2.0 technologies rests in the hands of social networking sites like Facebook.

Facebook incurs most of Peter’s wrath and I can understand that countless hugs, vampire bites and who knows what else is banal, but 16 year olds getting sick of this sort of thing doesn’t affect the business model.

The real question is whether Facebook can make money from those kisses and “most people like you” surveys.

Personally I think they will struggle because, as Peter points out, people aren’t prepared to pay for this stuff.

Whether this means Facebook is doomed remains to be seen, however it’s clear the site is not worth 15 billion dollars and online advertising is going to decline with the rest of the economy.

I suspect Peter’s right about Facebook being way overvalued, as was MySpace, Second Life and countless other web 2.0 properties, but that’s simply the effect of the hype that surrounded this space over the last few years. It really has nothing to have nothing to the underlying web 2.0 technologies.

Peter has a good point about the sustainability of many of these sites and it’s going to be very interesting to see how the business models develop as try to convince users these services are worth paying for.

But to call the web 2.0 as being dead simply because some web sites fail is a bit of a long bow.

What may be true is the term “web2.0” is dying. That probably wouldn’t be a bad thing as it was a bad, overused label anyway.

Why a cheap Mac netbook would be a mistake

AppleInsider is speculating about the possiblility of a $599 Mac netbook.

If Apple were to do this it would be a strategic mistake and damage their business.

The key to the Mac’s success is the point of difference they have to rest of the computer market. This difference allows them to achieve higher margins.

If Apple want to get down and dirty with Asus, Dell and HP they’ll find their products and margins will be dragged down with to their levels.

What’s more, it’s a marketplace they won’t win as other players have better low cost models. For instance, no other brand has a successful worldwide chain of branded stores.

The idea driving the netbook push is “Apple can’t justify charging double”. That’s true and there’s no doubt Apple have been overcharging in recent times. So there is room for some price drops.

But cutting prices to meet other people’s price points would be a suicidal move from Cupertino.

A far more sensible strategy is to accept sales are going to drop and focus on their core market, sacrificing a bit of margin won’t hurt either. 

Sure, Apple’s profits will take a hit but they’ll still be profitable while their competitors struggle to make pennies on $500 systems.

This is the key to survival in the downturn, not mindlessly slashing your throat to meet artificial price points.

It’s a lesson for all businesses in this economy. Focus on your core market and your margin. Giga Om has a good guide to “competitive differentiation”.

Selling services in a tough market

 

Gartner Research has an article on selling IT services in an economic downturn.

There’s some good advice there which applies to all service businesses, not just the tech sector.

Probably the most important advice is the final point: Make your own opportunities.

Those who run with the pack and just try to compete on price or simply cut costs are going to be in great trouble.

The businesses that have a point of difference are going to be the ones who thrive over the next few years. 

We need to be thinking about our products, our image, our pricing and the way we tell people our story and why they should use us and not the guy down the street.

Keeping Costs Down On The Net

This article originally appeared in the November 2008 Sensis “Small Business, Big Opportunity” newsletter.

There are few areas in business that change as fast as the Internet, particularly when it comes to business connection plans. What was good value two years ago can be pretty ordinary today.

Now we’re in uncertain times it’s a good opportunity to review what your Internet provider is giving you for your money. The right plan can help your business get the most from the Internet.

It’s often said there are three factors in an Internet plan: price, speed and reliability. You can choose any two of them.

I’d like to say price shouldn’t be the deciding factor, but in reality none of us have bottomless budgets. So the first step is to look at what you currently spend and decide what you can afford.

Budgets can vary dramatically between businesses. A $50 a month plan is fine for a home based business while tens of thousands per month isn’t out of the question for a larger business with heavy needs.

Regardless of your business size, forget the super cheap consumer plans. You need a supplier you can rely on. Business grade providers will also offer important add on features like fixed IP addresses and priority support.

Nothing breaks a technology consultant’s heart more than seeing a business struggling with a substandard Internet connection. The lost productivity dwarfs the fifty or hundred dollar a month saved from scrimping on connection charges.

So having set a realistic budget, we have to choose between speed and reliability.

Reliability is non-negotiable. The net, and in particular email, is a key business function and telling customers “sorry, the Internet is down” simply doesn’t wash anymore. As businesses move more towards Voice over IP, software as a service and web 2.0 applications, always-on fast Internet becomes essential.

This leaves us with speed. Internet speeds are split into two parts; download, the data that comes into your system, and upload, the data that goes out.

Internet plans usually state their speeds along the lines of 1500/256 which in this case means the download speed is 1500kbps and the outgoing speed 256. This is called an asynchronous connection which is the “A” in ADSL.

Home plans usually use ADSL connections because web surfing downloads far more data than it sends but office applications like email, remote access and Voice over IP need a higher upload speed.

So if you have lots of people working remotely, or you’re making phone calls over the Internet you’ll have to consider plans that have higher upload speeds.

There’s also data allowances, these can be tricky for all Internet subscribers as the fixed price plans shape the connection, meaning they slow you down once you go over the limit. For businesses that rely mainly on email, these plans are fine.

If your business Internet needs are more demanding though, the alternative is excess use plans where you are charged once you exceed the limit. This can mean horrendous bills if the wrong plan is chosen.

The good news with data allowances though is this is one of the areas that has dramatically changed in the last few years. So this is an area where the canny business can get more value for their Internet spending.

Even if your Internet Service Provider won’t come to the party on reducing your prices, there’s a very good chance you can negotiate a better deal in data allowances and speeds to help your business have the edge in these uncertain times.

Dell’s $70 netbook bundle

Vodafone’s $70 a month bundled laptop deal sees them joining Optus and Telstra in offering these plans. To date, there’s been almost zero uptake with these products as the dealers don’t seem to know or care about them.

Let’s see if Vodafone and Dell can do a better job of marketing these packages.

For consumers, it would pay to shop around on these deals as Vodafone currently offer the 5Gb data plan with a free modem for $39 per month.

Over a 24-month period (which is what we’ll have to assume the plan is without any further information) then the package costs $1,680. If we subtract the data component of $936 (24*39) that “free” netbook will cost $744.

Not bad, based upon Dell’s list price of $699 that’s a 3.2% APR, but you can be sure Dell and other netbook vendors will have better deals on their computers next month.

It always pays to do the sums closely before committing to these contracts.

Respecting your network

This article orginally appeared in Smart Company on November 25, 2008

Australia’s Spam Act is just over five years old, and it’s had some success in keeping locally sourced junk email to reasonable limits along with catching the odd perpetrator.

The Australian Communications and Media Authority has plenty of Spam Act information for business owners on its website and the requirements can be summarised in three principles – get consent, identify yourself, and make it easy to unsubscribe.

Before you can send commercial emails to people, they need to ask for them. In itself, this requirement eliminates your emails being classified as spam given the definition of spam is unsolicited emails.

Identity is important, as the recipient needs to know who the email is from. All legitimate businesses should have no problem with this.

Finally, unsubscribing is simply good manners. For a business owner there is absolutely no point in irritating potential customers and partners who don’t want your messages.

The sticking point in all of this is defining consent. The loophole in the act defines “inferred consent” if you have an “existing business relationship”. The current interpretation of a business relationship is merely having the business card of the recipient.

Sadly this gives any dolt you’ve been foolish enough to give a business card to at a networking function permission to bombard you with invites to get-rich-quick seminars and share boat schemes.

I can’t tell you how irritating I find idiots sending me three pointless emails a week because I put my card in the door prize bowl or gave the courtesy of exchanging cards while talking.

Even worse are the dills who start sending SMS messages to your mobile phone. In fact I’m amazed that anyone thinks ultra intrusive text spam is an effective way to generate goodwill for a business.

A particular difficulty with spamming people in your network is that your paths will almost certainly to cross again, which can put all parties in a difficult position.

So don’t simply add everyone who gives you their business card to your mailing list. By all means send them a follow up email, phone call or postcard, and certainly offer to connect to them on social networking sites like LinkedIn and Facebook, but spare everyone the spam.

Understanding your responsibilities under the Spam Act will help you get more from your mailing lists. Adding some common sense and manners goes a long way too.

Second hand PCs

Gartner reports that less than 50% of second hand PCs are making it into the resale market. I’m surprised it’s that many given the restrictive software licensing, particularly for Windows.

I imagine the supply is going to dry up even more over the next few years as people start to hold onto their computers for longer.

Where we’ve seen business computers last three to five years I expect we’ll see the life of office and basic home PCs blow out to eight to ten years.

There’s three reasons for this; web based applications, little innovation and the recession.

The recession is a no-brainer. As I posted previously, computers purchases are deferrable and as money gets tighter users won’t replace them until they are throughly flogged.

This isn’t such a bad thing for users as there’s little compelling reason for buying a new computer if the current is working fine. For the majority of users who surf the web, type letters and do the odd spreadsheet they could get by with an eight year old computer.

Running eight year hardware becomes even easier if you’re running web based apps. As long as your system can run a reasonably modern browser, all the rest will follow.

This raises big problems for the bigger vendors. They are going to have offer some pretty compelling reasons for buyers to junk their old systems.

In the meantime, buyers of used systems might find the market remains tight.