New York "Long Arm" Falls Short for Alleged Defamation

Movers can be a scurulous lot, at times pulling all kinds of tricks to extract more money from people, suddenly jacking up prices significantly above estimates that are artifically reduced as a come-on. (Though a great many movers are legit and I have a lot of sympathy for them, as I used to do it for a living.) And one has found, as a greater number of businesses will over the coming years, that consumers might have the last say.

And so, as has happened in so many other areas, people who have felt themselves to have been stung decided to do something about it - on the Internet. The site MovingScam.com offers advice to those about to hire movers, runs message boards, and warns against certain companies. One of them is Best Van Lines.

According to a story at Law.com (caveat, I write for a couple of magazines owned by the publishing company), MovingScam.com owner Timothy Walker posted that Best Van Lines was operating without legal authorization or mandated insurance. In September, the company sued in New York for $1.5 million in actual and punative damages. Walker got the case transfered to his home state of Iowa, presumably making it expensive and difficult for Best Van to take action. A New York court said that the state's long-arm statute, which allows New York courts to have jurisdiction when someone has transacted business there, even if the person resides in another state, doen't apply in this case. And now the Court of Appeals has agreed.

What makes this a business issue is that consumer critique and rating sites are springing up like weeds. Displease customers, and it's likely to come back to haunt you. Some companies try to use law suits as a way of silencing opposition - a classic example of a SLAPP (strategic lawsuit against public participation) suit. This has just become more difficult when the customer isn't in the same state. As 2nd Circuit Judge Robert D. Sack wrote in the decision:

"These courts have concluded that the posting of defamatory material on a Web site accessible in New York does not, without more, constitute 'transact[ing] business' in New York for purposes of New York's long-arm statute."

The best defense against bad mouthing from consumers is to do business well and honorably in the first place.

US Agencies Rethinking Financial Reporting

According to the Financial Times (sorry, no free link), both the Securities and Exchange Commission and the Treasury Department are planning studies of a complete financial oversight overhaul:

The rules-based regulatory structure, built up since the 1930s, has been criticised by representatives of the financial services executives, who have called for a more flexible regulatory philosophy akin to one in the UK.

For those that done realize, the US and Europe have taken different directions toward financial controls. In our own land of individualists and rule-breakers, the approach has been an ironic reliance on rules and checklists. If you were able to mark off all the boxes, you'd be safe. The difficulty is that you have to go through all the checklists, even if they didn't really apply to your circumstances, which meant increased compliance costs.

Europe has employed a more principle-driven approach of stating what needs to happen and allowing corporations to find their own ways. It's become popular to invoke this model, particularly among many who think that it will mean an end to "needless" regulation. Personally, I think that many hope a new approach would largely free their companies from regulation, period.

While both models have their strengths and weakness, I'm not sure that the European approach will deliver American companies what they think they want. After all, it's generally easier to satisfy the letter of the law than its spirit. But if you must satisfy principles rather than checklists, aren't you essentially looking at the spirit instead of the letter? Directors and managers won't necessarily be able to say "We followed the checklist" when investors claim a violation of the principles, or spirit. I've found in life that almost every time something seems to be the solution to a problem, it almost inevitably makes things worse. Let's hope that American companies don't rue getting what they asked for.

Competing Against Governments and Universities

A recent case in the Eastern District of Texas reminds us that businesses have to look beyond other commercial entities when it comes to competitive pressures. In CSIRO v. Buffalo Technology, Inc., the Commonwealth Scientific and Industrial Research Organisation, the Australian national research lab and technology licensing arm, sued Japanese company Buffalo Technology for infringing on a 1992 patent that CSIRO claimed covered all of 802.11 a/g wireless technology. The Australian agency just got an injunction against Buffalo, as the Patently-O blog and other sources have reported.

A large number of prominent companies are trying to challenge the patent. Whether the patent is valid and reasonable or not, what has become clear is that the days of thinking that competition meant only other companies are over. Universities and governments, all in need of revenue sources, are looking at their intellectual property to see what it might offer. Now consider that even a smaller country is going to have financial resources beyond the wildest avarice of corporate managers. Fail to consider what such control and are willing to do, and you could find yourself on the wrong side of a judgment.

Chinese Tires Show Outsourcing Bounce-Back

According to a New York Times story:

Federal officials have told a small New Jersey importer to recall 450,000 radial tires for pickup trucks, sport utility vehicles and vans after the company disclosed that its Chinese manufacturer had stopped including a safety feature that prevented the tires from separating.

This is a prime example of the dangers of outsourcing, with importing often being another face on the same situation. I'm not suggesting that it never makes sense, but too many companies are short-sighted in considering the business trade-offs. They look at the unit price and forget little things like quality control that can cause government agencies like the National Highway Traffic Safety Administration to force them into a full recall. Management of Foreign Tire Sales of Union, NJ apparently suspected a problem for two years before telling anyone. People have been killed in accidents allegedly caused by the tires. Anyone want to guess whether corporate management and board will become defendants?

Magazine Manager Makes Marketing Matter

It's great to hear about other businesses and to use their experiences to help get a new perspective on your own. John Griffin, president of the National Geographic Magazine Group, gave a speech early this month that is fuller with business wisdom than many books. If you change publisher to company and magazine to product or service, virtually all of the advice adapts beautifully. Here are a few points he made, relating to measuring how a company is doing, that I particularly enjoyed:

• live in a fact based world


• make numbers pass the common sense test


• too much data is as bad as too little data; act now

Just these few points could help most corporations make more sense out of the mind-numbing data analyses they do. I'd add one other: mistakes happen - it's not learning from them that is the problem.

Peer Patent Reviews Start at USPTO

The U.S. Patent and Trademark Office has just started on a year-long experiment in peer patent review. The way the process now works is that companies and people submit patents, often with broadly-phrased claims, in hopes of getting a license on a new way of doing something. PTO examiners will push back on many of the claims (fewer than half of applications reviewed last year were immediately granted a patent). But there's been question in the patent community with how well the process is working. For example, look at the case of a company suing the Blackberry's manufacturer for patent infringement. RIM lost in court and had to pay hundreds of millions to the plaintiff, yet now there are some challenges to the patent, which may not survive. It would be too late for Blackberry, which wouldn't get to recoup the money.

So the PTO is working with New York Law School's Institute for Information Law and Policy to try a peer review approach. Companies (including Microsoft and IBM) voluntarily provide software patent applications and anyone can comment and look for prior art that would show the invention isn't new or novel.

The idea isn't actually new; both the European and Japanese patent offices have used a different patent model from the US. Instead of doing all reviewing in-house, they grant applications and then providing a period of time in which others can challenge the basis of the patent. And software is a great place to try this - it's one of the biggest causes of patent application overload and one area where much of the community is already used to peer review in the form of open source software. But with backlogs that can run from a couple of years to five or six (particularly in biotech), it's worth a try. Almost anything is.

Strange Sitings from the PC Wars

The PC market is an obviously competitive one, but some stories (via Slashdot.org) show a number of odd things happening right now. For example, Microsoft is apparently in a sales jam, because it has launched a "fact rich" program to convince customers that they should adopt Vista now, according to The Investigator blog at APCMag.com:

"Some customers may be waiting to adopt Windows Vista because they've heard rumors about device or application compatibility issues, or because they think they should wait for a service pack release," the company said in a newsletter.

"To help partners and customers get the real story, Microsoft has created a comprehensive set of fact-rich materials illustrating how Windows Vista is ready today and tomorrow."

However, a link in the newsletter leads customers to a place only available to computer makers that will sign a non-disclosure agreement - which pretty much means that they can't tell you what they just read, and so, theoretically, can't pass on any of the information they just learned. But then, the story proceeds:

What we do know, however, is that Vista service pack 1 is, in the company's own words, designed to address "deployment blockers and high impact issues", suggesting that until the release of SP1, you will have to contend with ... deployment blockers and high impact issues. Hardly the basis for proceeding with confidence.

Maybe the facts are a little too rich for customers. But this puts Microsoft into an awkward position. They clearly released the system before it was ready to use - probably because of pressure of hardware manufacturers and, possibly, demands from those corporate clients that had already paid for the product through site licensing of Windows.

Money has to be a big issue. Yes, Microsoft got a big financial boost earlier this year and was claiming market success with Vista. But what many journalists covering the story missed was that the company does a lot of this site licensing. By accounting standards, although they collect the money, they don't get to treat it as income until they ship a product. Lack the income, and your stock looks bad. But now it's gone through that initial wave and needs the next chunk of money, which generally means the smaller purchases and consumer sales.

But people aren't adopting the way management wants and needs because Vista has received such bad press about the "deployment blockers and high impact issues." In other words, if your computer isn't pretty new, it won't work, and even if you do have a new machine, the system can run incredibly slow, as I've heard from people I know who are using it.

So what might happen is maybe another quarter of "good" results but then a pot hole when the continued sales don't continue. It sounds like Microsoft was hoping that people would buy anyway because, well, they always have. But I think users are tired of paying for complete and total crap. That's why Dell has started selling XP on systems again and why Linux continues to expand, particularly with Ubuntu offering what is supposed to be a more user-friendly version.

This all makes the second story sound even odder: Dell refuses to sell a system with Ubuntu to a business. So why won't it? Is there some licensing agreement with Microsoft or someone else that makes it impossible for them to do so? Or do they want to upsell into a more expensive model with an operating system that adds a bit of additional margin dollars?

What is going on with these companies? They seem to have lost sight of how important customers are. To play such games - because that's what they are, playing with people for your own ends - is essentially is the essence of the con job. You may not get caught, but when you do, it's painful. Better to forgo some profit today and keep your customers than to pump up your numbers for one quarter and find that no one likes doing business with you.

Good Piece on Venture Blow-Up

I just saw Inc's article by Max Chafkin on Jonathan Abrams and his experience starting - and getting kicked out of - Friendster. AS the opening says:

Jonathan Abrams created the first online social network and enlisted Silicon Valley's best and brightest to run it. Yet Friendster flamed out spectacularly. What went wrong?

It's an interesting look at the weakness of the venture capital model, at least so far as companies go. It's a sink or swim philosophy, and not geared to bringing out the real value of the businesses. That agrees with what I've seen close up and with what I've heard from those who have gone the backed entrepreneur route. It's also an excellent look at how a company and business "experts" can be completely blind to the obvious, insisting on wading through heavy currents when a footbridge is within reach. The company wanted a certain degree of automatic links among members, creating an exploding data nightmare. (It makes you wonder how business networking site LinkedIn.com manages, though it can get sluggish.)

Yahoo Shows Strategic No-No

Terry Semel is out and company co-founder Jerry Yang is in as Yahoo CEO. After a reorganization in December, continued disappointing earnings (while Semel earned an estimated $71.1 million last year, as estimated by the Wall Street Journal), and operational snafus, the company felt the need for changes.

it's quite a change in fortunes. According to the Journal, the man originally was a savior:

Mr. Semel, 64 years old, is widely credited with helping to focus a foundering Yahoo following his 2001 arrival and helping it ride the recovery in online advertising. The Sunnyvale, Calif., company is one of the largest sellers of such ads, and has played a key role in leading some name-brand companies to increase their marketing on the Web.

Then key managers left, they weren't replaced, the company couldn't digest the acquisition of an Internet ad platform company quickly enough, and things generally went badly when Google continued to out pace Yahoo. So now there's talk of possibly selling the company, or partnering, or ... something.

I wonder if management will really take a page out of Google's book. It's not to copy, but to better understand how Google gets so much right where it counts - with customers. They actually seem to listen, because nothing else would explain how they would continue to pick up share in areas filled with the fickle. An audience of over 100 million is a significant asset. Instead of playing catch-up in search and search advertising, why not talk to the customers big-time? Find out what they want? Not through focus groups, but by getting managers to actually talk to the people the company deals with, learn what they want, what they like, what's missing. Now that would be a radical solution.

Lots of Labor That's Cheap - So Far

No matter what industries you find interesting, if you are remotely connected to manufacturing - professionally, economically, or politically - you should read this article at ExtremeTech.com. Mark Hachman opens his piece as follows:

About ten years ago, I was given a tour of a Visioneer scanner factory in San Jose. Even though I knew that only global companies like Toyota could essentially afford to build a car through an almost entirely automated process, I was nevertheless amazed at how many people were required to actually assemble a scanner. And I'm not talking about management, but hands-on "put this widget there" assembly.

That's the intellectual setting. The physical location, though, is Gigabyte Technology, one of the big Taiwanese manufacturers of motherboards, a key component in PCs. Although there is enormous room for consolidation in the industry, the company claims about 10 percent market share, with $1.41 billion revenue and 1,249 patent applications on file. It also builds PC power supplies (a fiercely competitive market), complete computer systems, and cell phones. And it does a whole lot of work by hand, as you can see in the pictures that Hachman took.

What makes this so important for business is that manufacturing, on which all of business ultimately rests, for years has seen a tug of war between automation and cheap labor to keep expenses down. Either a company would use computers and robotic approaches to building and assembly, or they'd try to find ways to drop the cost of having people do tasks. In the U.S., automation has, I think, been the predominant force because it's difficult to get people to work ever more cheaply. But in Asia, in one of the most high-tech endeavors you could possible imagine, at one of the globally key companies making a foundation product from PCs, the work is often manual. In other words, the slight savings (because labor, at least in high tech, is typically 5 percent of the total cost of goods) that companies see relies on incredibly low costs of labor. Not slightly lower, but monumentally so.

What happens when people get tired of having their hours subsidize corporations, particularly when they're making the very products that are symbols of economic success? China is already seeing an increase in the visibility of organized labor - look at this BusinessWeek interview with China's 80-year-old All-China Federation of Trade Unions with 137 million members that wants to unionize ... Wal-Mart.

If groups in China can start pushing like this, it could happen elsewhere in Asia. Add the increasing pressure for Beijing to allow it's currency to trade at more realistic values (an increase up ward of 40 percent), and there could be problems for companies outsourcing their manufacturing.

With so much actual work done by hand - and I've heard from a number of sources that China in particular lags by far in factory technology - then that dependence might balloon the impact of increased labor costs. That's already happending with qualified IT help (as I learned in a Computerworld article about two minutes after posting this piece). Finding people is extraordinarily tough and salaries there are climbing 20 percent to 30 percent a year with high turnover. That means you can add additional amounts for recruiting and training that go right out the window with the departing employees.

Companies have jumped on the outsourcing bandwagon without considering the true costs of doing so: inescapable dependency on others for fundamental business processes, increased inventory costs when goods take 50 to 70 days to arrive by boat, affect of leaping fuel prices on shipping expenses, and now extensive sensitivity to labor prices.

I get a sense that there is a disaster in the making that has been building for years, and companies will only become aware of their vulnerabilities when they feel themselves beaten up.

PCs and Customer Disservice

Computerworld has an interesting article about just how bad call centers can be. CFI Group Worldwide LLC in Ann Arbor published a study of customer satisfaction with phone service in six industries. On the top were catalog companies - no surprise, as customer unhappiness means losing sales. And at the bottom were PC vendors. Between offshoring and having inadequately trained people to save money, the companies actually paying a heavy price:

According to the survey, nearly 73% of the people who have bad experiences with their PC companies' call centers said they will consider purchasing their next PCs from another company, while 85% of customers who had their problems resolved by calling a PC call center said they would continue doing business with the company. But only 33% of customers whose problems were not resolved said they would continue doing business with a PC company, according to CFI Group.

The PC industry is particularly bad, but many companies treat customer service as an expense. That is foolishness. Customer service and handling complaints is in reality one of the most effective forms of marketing the business can have. When you satisfy someone, you make it far more likely that they'll do business with you again. That lowers overall costs for new customer acquisition and increases the lifetime value of customers, which should translate into higher profitability. When you think you're saving costs by sending work offshore - and actually, experts say that the real savings is only about 20% of what the business function would run domestically - you're actually undercutting your own business. For gosh sakes, 25% of the callers to the PC companies hang up before they can get an issue resolved. That's a powerfully large group of people to antagonize. It's another example of short-term thinking and not seeing how the parts of a business come together.

Fast Track Patent Reform Sees a Few Bumps

Lately, Congress has been in a rush for patent reform becasue of the litany of problems that have become regular fodder for IP lawyers and corporations: crushing backlogs, an ever-increase scope of what can be patented, complaints about the quality of patents granted, lack of modern IT systems to help the Patent and Trademark Office (PTO) operate in a more efficient manner. But there has also been concern whether the haste might lead to more patent waste. Now a group of Republican senators has sent a letter (via Dennis Crouch's Patently-O blog) to both Democrat Patrick Leahy and Republican Arlen Specter on the Senate Judiciary Committee about whether slowing the impulse to fix and thinking over the steps before taking them might be a wiser approach in the long run.

Target is in the media target in an NPR story by Cheryl Corley - appropriately aired in June, as it's about weddings. Not only does Target have its Club Wedd site, where brides and grooms flushed with licensed avarice can register, but it had designer Isaac Mizrahi create a selection of wedding dresses, all of which are about $160 or less. The story indicated that these prices were, to use the vernacular, way cheap, but had the requisite expert saying that getting a gown for that special day isn't like shopping online for a blender, and that it's not an impulse buy.

I would have liked exploration of a slightly different angle. Brides aren't buying a collection of things: dress, favors, flowers, catering, and so on. They're buying an experience they've been brought up to believe as their birthrights. That explains all the bridal magazines - with nary a groom in sight. The wedding is all about her. That means the bride will want people to know she's important, to cater to her, and, most importantly, to play their designated parts in her fantasy-come-true. It's hard to expect that white charger to come roaring through the computer monitor.

Oncologists Raked In Money On Cancer Drugs

Call me naive, but I was shocked to see the New York Times article on how oncologists were making enormous sums on selling cancer drugs to patients:

Dr. Robert Geller, an oncologist who worked in private practice from 1996 to 2005 before leaving to join a biotechnology company, said that cancer doctors knew the profits they could make and in some cases would change treatment regimens or offer unnecessary care to make extra money.

A Bristol-Myers document that came into the public eye as part of a law suit shows that some doctors were making 65% of their revenue and net income from drugs. Representatives of the manufacturers would bring spreadsheets around to the doctors' offices to show how much they could make. And when Medicare changed its reimbursement approach, reducing these profits, doctors may have changed their treatment regimens to help make up the difference. Some doctors are blaming the way that Medicare reimburses doctors, but do they really think they bear no responsibility? Could it be that, following the previous Medicare guidelines, when they charged anywhere from a 20 to 100 percent markup on chemotherapy drugs in their offices and pocketed the profit they were putting business before humanity? When I was a young child, my pediatrician would literally make a house call in the snow if a kid had a potentially life-threatening condition because he had lost one of his own and never forgot it. I guess today many doctors would charge by the mile.

Cato Institute Scholar Misses Patent Point

In Saturday's New York Times, Cato Institute adjunct scholar Timothy B. Lee went on at length in an argument that software patents are stifling technical innovation. There were only two problems: he had a poor grasp on business history and his logic was faulty.

I hadn't noticed the piece until I saw mention of it in PATNEWS, a patent news and opinion email service. But I went back and read through last Saturday's piece. Let's start with the characterization of Microsoft as a "growing company challenging entrenched incumbents like I.B.M. and Novell." Technically that was true - and it also owned the desktop computer as it does now. Yes, Windows was in an early state, and I suspect that the company's only having six patents might be true, but that's because so much of what it had done wasn't at all revolutionary. DOS was an operating system much the same as any other - just small enough to run on a PC's then limited resources. Early versions of Windows hadn't done anything not previously covered by Apple and by Xerox before. But as Microsoft went on a heavy patenting binge, so did its innovation. That's because patents are an incentive to innovation.

Yes, you can find yourself locked out of doing something in a particular way, which is why you invent a new and possibly better mousetrap. Then you patent it and enjoy a limited benefit from that patent. Since companies have gone on a patent spree since gaining protection for fundamental algorithms and designs became possible in the 80s, software has leaped ahead faster than anyone ever would have expected: online services, graphical interfaces, new ways to model and plan businesses, home entertainment systems. So where is the lack of innovation?

Mr. Lee's main argument seems to be in the Verizon v. Vonage case:

Vonage developed one of the first Internet telephone services and has attracted more than two million customers. But last year, Verizon — one of Vonage’s biggest competitors — sued for patent infringement and won a verdict in its favor in March.

Does that mean the idea of software patents is bad, or that the decision is bad and, perhaps, the patent should never have been granted as there were Internet telephony service years before Vonage. Some go back to the mid-1990s - a good four or five years before the creation of Min-X.com, Vonage's predecessor. And Verizon's patents, whether you think they are valid or not, certainly came before that company's genesis as well.

So what exactly was the innovation that Vonage brought to the table? As it is, the company has already said that it thinks it's found other ways of providing its services to avoid conflict with the Verizon patents. If anything, the Verizon patent case has pushed it to do something at least slightly different and new. So much for Vonage serving as the poster child for the need to eliminate software patents.

Mr. Lee then argues the following:

In fact, companies, especially those that are focused on innovation, don’t: software is already protected by copyright law, and there’s no reason any industry needs both types of protection.

This is more nonsense. Copyright is protection of the specific expression of an idea or concept. Patents are protection for an underlying concept or idea itself. Under copyright law, I can write about the same subject, even with the same twist, as someone else, and if I'm using different wording, it's unlikely that the two articles will be seen as conflicting. But that's about exact expression. So say that I write a new algorithm - or unique and clearly defined approach to solving a specific problem - in one programming language like C++. I'm no lawyer, but I suspect nothing in copyright is going to keep someone else from expressing the exact same algorithm in a different programming language, like Java. So much for equating the two protections, because now I have no lock on the unique method I've developed to solve a problem. And anyone who has dealt with an issue of copyright infringement would laugh at Mr. Lee's statement, "The rules of copyright are simpler and protection is available to everyone at very low cost." Obviously he's never filed a suit in federal court. Then he bemoans the high costs of patents - and, yes, it's very expensive to file and maintain a patent.

But isn't that an issue of the market? Is this the Cato Institute looking into business protectionism? Of course companies must file patents to stay competitive. They also have to be innovative, do market research, develop new products, establish themselves, all of which are so much more expensive than obtaining patents that the comparison is almost laughable.

Patents are part of business strategy - and that's why Microsoft went into them so heavily. It's not that Bill Gates used to be enlightened and now is trying to protect his turf. It's more that his understanding of business has grown. Perhaps Mr. Lee should chat with Microsoft's chairman and see if there's something he could learn as well.

Cisco Tries New Business Model

The Financial Times has an article (which seems to be publicly available, at least today) about Cisco's efforts at a more entrepreneurial approach to develop new business units, rather than just acquiring them. Some of the important lessons are:

• The company wanted to "create a sustainable long-term growth model."


• Use proven managers to make success more likely.


• Use a "free agent" employee model, where after a certain number of years at the same job, an employee could look for another opportunity within the company. That reduces fighting when someone is transferred between divisions.


• Make use of the enterpreneurs who joined the company through acquisitions because "[t]hey don't stop being entrepreneurs."


• Offer incentives like pay bumps when a venture is successful.


• Create an atmosphere where failure is acceptable, because new ventures are inherently risky, and you don't get breakthroughs by playing it safe.


• Innovate in business models, not just technology.

If you're in a large company, this article should be a must-read. One reason acquisitions generally do so poorly is that one corporation essentially pays a premium for a revenue stream - like giving someone a ten dollar bill for a five - and then has the additional costs of trying to make everything work together. When you innovate from the inside, the costs are far smaller, you get the full benefit of real success, and it's easier to make the fit work.

One thing that does seem to be missing is dealing with moderate success. Tigns that lose money you can drop and reassign the people involved. But what if a new venture is reasonably successful, yet not so profitable as to make managing it finacially worth the time of the parent corporation? They could sell the group to someone else, but lose access to the personnel who were involved. So, create a separate holding company that manages smaller ventures. That way there is still return on the investment, you don't need the involvement of the main management team other than looking at the holding company as it would an investment in a third party, and you can still bring someone necessary back and, should one of the small ventures suddenly hit on something big, the parent corporation can reap the benefit.

US Auto Makers Shoot Themselves in the Gas Tank

With market share slipping and the future generally looking drab, you'd think that US auto makers would decide that leading in what they would offer to consumers would be smart business. But New York Times reporting suggests that the CEOs of Chrysler, GM, and Ford - can't really call them the Big Three anymore - are pushing on Congress to undercut mandatory increases in fuel mileage:

The executives argued that the bill’s proposal to increase mileage requirements for cars and light trucks would be impossible to meet and would gravely damage the automobile industry.

It would increase the average mileage requirement for passenger cars to 35 miles a gallon by 2020, up from 27.5 miles a gallon now, and would apply to light trucks and sport utility vehicles as well.

So these business "leaders" are saying that they can't increase average gas mileage by 8 mpg in 13 years? Time and again I've heard CEOs bemoan how too many employees are negative and stuck in old thinking - not being positive. But you've got three engineering giants, even if not the three biggest, that are just giving up. To me it sounds like another case of corporate whining of how business is just too hard. Too bad. Think the Japanese and Koreans won't be at those numbers, or lower, within the same time frame? It's as though these executives are intent on commercial suicide. It doesn't matter whether the government is mandating this. Wake up, people! When gas prices keep hovering above $3/gallon in this country, it's the market that will be making the demands. But God forbid that these dinosaurs make a strong fight for their existence. Clearly the big problem is not in labor costs, but in trying to do business without imagination, daring, and resolve. Anyway, how much courage does it take to run out of a burning building?

Being Honest About Customers

Amp'd Mobile - a relatively new type of cell company called virtual, because it leased capacity from traditional carriers, filed for bankruptcy on June 1. That's not a long time from one measure, given that Amp'd only debuted in the U.S. in 2005, but it's an eternity to show how unwise a business model can be.

Information in a BusinessWeek story suggests that the problem facing the company wasn't a lack of customers. Instead, in a way, it suffered from too many. Amp'd's target market was "an edgy upstart geared to free-spending youths," according to BusinessWeek. It racked up an estimated 175,000 of them.

Certainly the services were designed for a young market, as indicated in the company's Wikipedia entry:

Amp'd mobile's service is built around Amp'd Live, a permanently installed BREW application on all Amp'd Mobile phones, which features downloadable and streaming video on-demand clips, live events such as Super Cross, streaming phonecast radio stations, downloadable content such as games, ringtones, and songs. They are currently the only carrier licensed to show clips from the Ultimate Fighting Championship.

Unfortunately, the youth market it tapped appeared not to enjoy paying its own way, according to the story's quoting of some court filings:

Collecting payments from these subscribers proved to be a challenge, however. "Approximately 90% of the debtor's customers were on 18-month service contracts," according to the filing. "The debtor began to find a host of credit and collections problems (that) contributed ultimately to a liquidity crisis." By May, the number of nonpaying customers reached 80,000.

Almost half of the customers weren't paying their bills, though I would be surprised if the carriers that were wholesaling capacity would be understanding.

Not all growth and not all customers are good. One of the subtle strategies that some business experts use is to allow a competitor to succeed in target markets that are poor customers because of payment issues, high costs of servicing, or any other reason, for that matter. But to pull off such a move, a management team must have undertaken the research and data analysis that would allow such an identification. It comes back to that adage about doing what you know. If you don't really know about your customers, what makes them tick, what they want, and what they're like, then there's not a whole lot you'll be able to do.

Step Away From That AK-47 - Or Pay the License Fee

Apparently (and thanks to Slashdot.org for the tip), Russia wants licensing fees for producing AK-47s. Mind you, the rifle has been around for some six decades pretty much as it is now. They must be taking a page from the US corporate patent strategy notebook.

Saturn Takes on Competition - in Its Own Dealerships

It takes confidence in your own products and services to run an advertising campaign that directly targets your competitors. But Saturn is going that one better. According to MediaPost.com, the company will have top competing sedans at their dealerships for comparative shopping. The program is to launch June 11, incorporating television and print advertising as well as direct mail and point-of-purchase materials.

Such a campaign is nervy and nerve-wracking. There is always that chance that someone says, "But these other products are better." Yet maybe it's not as dicey as all that. Edmunds.com says this about the Aura:

After years of producing forgettable cars, Saturn steps up its game and brings out the Aura. With its well-rounded personality and attractive design, the Aura finally gives Saturn a legitimate contender in the midsize family sedan segment.

The prices of the cars are roughly comparable, as are the features. But Saturn has a couple of built-in advantages. The division of GM is coming off a stretch of under-performing, so any improvement will appear magnified. Then there is the very act of challenging its competitors. Even if few consumers actually try out the other cars, they walk in thinking that the product has to be good, because they'll willing to show them side-by-side. And then the only salespeople around will be working for Saturn. This seems like one of the smartest marketing pushes I've seen in a long time: no unrelated hype, all customer focus.

New York Times and Reinventing the Newspaper

There's a reason that the New York Times has been spectacularly successful online compared to other newspapers - they're not trying trying to do what in web marketing used to be called brochureware. Reading a book on television is not compelling programming. Showing movie stills in a magazine is boring. Writing for the stage is different from writing for the page. Every outlet has its own structure, form, and demands.

Too many newspapers, magazines, and other publishers are just trying to take what they have and somehow do that "web thing." And while the TimesSelect premium online service isn't perfect, it's a lot smarter than most of its competitors. I just got a mailing from them that highlighted its video site (where you can find all those clips that they are trying, not with complete success, to integrate with their print stories online). What are they offering that's new? L'Eau Life, "a short animated film created for TimesSelect by artist Jeff Scher." That is the online counterpart - not translation or relocation - for that perennial favorite section, the comics. Now that's reinvention.