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October 2008
Internet sales in the dumps too
Not even the mighty Internet is immune from this economic downturn.
It’s easy to see that consumers are spending less when your neighborhood store closes or marks goods down to fire-sale prices. It’s less obvious on the Internet.
New numbers from comScore Inc. show that retail sales are still growing online - but at a much, much slower rate. Web sales grew by 6 percent in the last quarter and by 5 percent in September alone according to comScore. That may sound pretty good - until you compare that to the 19 percent growth in September 2007 and realize September’s growth was the lowest rate in recent memory, at least.
“Consumers’ economic pressures continue to have a significant impact on retail spending, which is evident in the slowing growth rates in the online channel,” comScore chairman Gian Fulgoni said in a statement.
Fulgoni - like most in the Web biz - said he expects growth rates at Web retailers to continue to outpace their brick-and-mortar counterparts.
He may be right. If nothing else, budget-strapped consumers are likely to rely more on the Web for bargain hunting. They may also cut back on trips to the shopping mall to save gas money.
Then again, if they can’t afford to pay their Internet bills, it may make it a bit harder to buy stuff online too.
Here are the figures from comScore:
U.S. Retail E-Commerce Growth Rates (Excludes travel, auctions, autos and large corporate purchases) Source: comScore, Inc.
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Dell launches new site for the holidays
The holiday season will bring millions of people to retail stores in search of new computers, but Dell is getting ready for millions of shoppers who want to buy online, too.
The computer maker rolled out a new Web page today that throughout the holidays will showcase daily deals, advice, customer reviews and range of other options and information. And in keeping with the company’s push to become more interactive, customers who visit Dell.com/everyday can sign up for notifications on new deals through e-mail, RSS feeds, Facebook and other social media.
With its traditional build-to-order direct-sales model, Dell allowed shoppers to customize their computers. By expanding the shopping options on the new site, senior managers said this week, the company wants to give online visitors more ways to personalize not just what they buy, but how they go about buying it.
This year’s holidays should prove interesting gauge on the ability of computer makers to push sales through the current economy. Most economists and retailers expect consumers to scale back their spending.
The season also will provide a measuring stick for Dell’s more-concerted push into the consumer market. While the company sold PCs through some retail stores last year, this will be the first season it has models designed specifically for in-store sales.
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Google agreement would digitize more books
In another major step toward changing the idea of books as we know them, Google Inc. has reached an agreement with publishers and authors to scan millions of books and post them on the Internet for users to read, download and print for a fee.
Under the agreement, Google will pay $125 million to settle a longstanding class-action copyright lawsuit with the Association of American Publishers and the Authors Guild.
In exchange, the two groups will let Google scan millions of out-of-print and in-print books and post them on the Internet through Google’s Book Search system. Authors and publishers will get royalties fees and a portion of the advertising revenues Google generates on Book Search.
Working with libraries in California, Wisconsin and Michigan, Google already has scanned about 7 million books and posted parts or all of them on its Book Search Web site. They range from classics like Homer’s Iliad and out-of-print college textbooks to modern-day children’s readers like Kumak’s Fish.
But the agreement announced Tuesday marks the beginning of a monumental expansion of the service, according to its backers.
In particular, the agreement promises to greatly increase the availability of out-of-print books - which now can be found only in limited collections - by making them accessible to anyone, anywhere in America.
“This innovative settlement breathes new life into millions of books without jeopardizing the rights of individual property owners,” Richard Sarnoff, Chairman of the Association of American Publishers said in a conference call with reporters.
Under the agreement, consumers will be able to find and read samples of books online and view entire copies on their computers for a fee. They’ll also be able to print unlimited pages from a book for a per-page fee. Institutions such as schools and libraries will be able to purchase a subscription that would give the users broader access.
Proceeds from the services will be split between Google, publishers and authors. Exactly how much the services would cost consumers, universities and other users hasn’t been determined yet, officials said Tuesday.
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Michael Dell, chief blogging officer
A couple years ago, Michael Dell urged his company to expand its presence on blogs and other social media. Now, he’s joining the fray.
Dell opened up a new company blog today with its first entry, offering tips on how companies of all sizes can simplify and save money on their technology systems — particularly in the current economic mess.
While he often posts on the company’s internal blogs, this was the first time Dell authored an external piece. Apparently, it won’t be his last, either.
“He’ll continue to selectively blog on topics of interest to Dell stakeholders,” said company spokesman David Frink.
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Dell got a nibble from Craigslist, but this one got away
Michael Dell can be a pretty good salesman, but he doesn’t get ‘em all.
Craig Newmark, the guy who put the Craig in Craigslist, met Dell at a meeting recently. In an interview today, Newmark recounted a snippet of their exchange:
Newmark: “By accident, I wound up sitting by Michael Dell. He showed me a notebook that I was considering getting.”
Zehr: “Did he make the sale?”
Newmark: “Almost. As I recall, the thing doesn’t have a TrackPoint on it — the little red touch point in the middle of a keyboard that’s on ThinkPads.”
In Dell’s defense, it would’ve been a pretty tough sale. Newmark spent 17 years at IBM, which popularized the TrackPoint on its ThinkPad PCs.
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AMD spins off manufacturing operations in Austin & elsewhere (Update 1)
Advanced Micro Devices Inc. is spinning off its semiconductor manufacturing operations, teaming up with an Abu Dhabi high-tech investment firm to create a new company that will take over its factories and related operations in Austin and elsewhere.
In a statement, AMD said it is joining with the Advanced Technology Investment Co. of Abu Dhabi, in the United Arab Emirates, to create a new company called “The Foundry Co.”
Under the joint venture, the new company expects to move forward with plans to build a new manufacturing facility in upstate New York that AMD says will create more than 1,400 jobs. The new firm also will consolidate at least parts of AMD operations in Austin, Silicon Valley, New York and Dresden, Germany.
Spinning off such a significant portion of AMD’s operations will result in “a small number” of layoffs, AMD CEO Dirk Meyer said on a call with analysts and media. He provided no further details. Meyer also noted that about 300 employees at AMD’s offices in Austin, Sunnyvale, Calif., and East Fishkill, N.Y., will join The Foundry Co.
Hector Ruiz, former AMD chief executive and current chairman, will become chairman of The Foundry Co. On the call, Ruiz said he will leave his post at AMD, ending his eight-year tenure with the company.
AMD, which has been struggling in recent years while trying to reduce its manufacturing costs, will get a lot of financial help as part of the deal too. Advanced Technology Investment will invest $2.1 billion to start up The Foundry Co., and the new company will also assume $1.2 billion of AMD’s existing debt.
At least some industry watchers were already applauding the deal early Tuesday.
“Good on AMD for putting together the right partnership,” said technology analyst Roger Kay, president of Endpoint Technologies Associates, Inc., adding that it was a maneuver “worthy of Harry Houdini.”
“It (AMD) gets out from under some of its debt and receives a cash infusion from a patient source,” Kay said.
Dirk Meyer, AMD’s president and CEO, said the unique partnership was assembled and forged by his boss, AMD chairman Hector Ruiz.
“Today is a landmark day for AMD, creating a financially stronger company with a tightened focus,” Dirk Meyer, president and chief executive officer of AMD said in the statement.
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eBay adds businesses, cuts jobs
It must have been a busy weekend over at eBay Inc.
Early Monday morning, the online auctioneer announced it is buying two companies that will further its push into the online advertising and payments business.
At the same time, the company said it will ax 1,000 employees - about 10 percent of its workforce - to cut costs and focus more on those anticipated growth areas.
San Jose, Calif.-based eBay said it will pay $820 million in cash to buy Bill Me Later, an online payment business that’s not unlike PayPal, which eBay already owns.
The company also is buying Denmark’s leading classified advertising side, called dba.dk and a related car classified ad business called bilbasen.dk for approximately $390 million in cash.
The money for those big purchases will come partly from costs savings from cutting those 1,000 employees. The company said it will take a fourth-quarter restructuring charge of $70-$80 million as part of the downsizing, but that it expects to save money on salaries and benefits in the long run.
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Sony unveils digital book with touch screen
Hoping to stir the sleepy electronic book market and steal some of the spotlight from Amazon.com’s Kindle, Sony Electronics is unveiling its latest Reader Digital Book this evening in New York.
Sony’s PRS-700, shipping to retailers this month and selling for about $400, is a sleek black slab with a 6-inch touch screen instead of the Kindle’s physical keyboard or the buttons of older Sony models.
Swiping a finger back and forth can turn the pages.
The PRS-700 holds about 320 books in its internal memory and has slots for SD memory cards and Sony’s Memory Sticks to store thousands more. It can also play back unsecured MP3s and AAC audio files.
The nearly 9-ounce device also includes an LED light for reading the digital ink screen in the dark. Sony says the book’s rechargeable battery lasts for up to 7,500 continuous page turns on a single charge.
In July, Sony changed its e-book business model, opening up its Readers to books in the Epub format from stores other than its own. It was a way to fight back against Amazon, which now offers more than 180,000 titles for its $359 Kindle.
While rumors circulated this summer about an upcoming sequel to the Kindle, an Amazon spokesman has reportedly said the earliest time frame for a new version is next year.
