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Richard Branson's Minimalist Web Strategy

June 30th, 2006 | No Comments | Posted in Main Page, Music, Web 2.0

While billionaires such as Rupert Murdoch storm into the Internet with major acquisitions, Virgin chairman Sir Richard Branson is taking a different tactic that seems Luddite in comparison. While Virgin just launched an online music site called Virgin Digital, Sir Richard concedes there is much more the company could do on the Web. "One of the problems is I do things I'm very interested in personally, and I don't do the Web very much," he said during an interview earlier today after Virgin unveiled plans for a two-day music festival in Toronto this September.

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Skype's Strategic and Monetization Potential

As Vonage's brand and stock comes under siege, it is interesting that Skype continue to enjoy growing goodwill as it becomes more of a mainstream tool (the free SkypeOut offer for calls in North America doesn't hurt). Nicholas Carr had a post last week critical of eBay CEO Meg Whitman's assertion during an interview with the Financial Times the company will eventually figure out how to monetize Skype. Here's Carr's take:

“We'll figure it out.” “There's something here.” “We already have some
ideas.” “We'll see.” I wonder how many other multibillion-dollar
acquisitions have taken place before the acquiring company had “figured
out” how to actually make money from the deal. I know there've been
plenty where the acquirer's money-making strategy turned out to be pure
fantasy, but how many have there been where there wasn't any strategy,
where the justification boiled down to “don't worry, we'll figure it
out later.”

While eBay will have a difficult time to ever justifying the $4.1-billion it spent to buy Skype, I would argue Carr's assessment is somewhat off-base and too dismissive. First, Skype is a high-margin $200-million, profitable business (unlike Vonage) that is growing as it becomes more of a mainstream tool with a variety of premium services. Second, Skype is starting to be more integrated in eBay's e-commerce operations. This will generate soft benefits such as better customer service and more efficient transactions, as well as hard benefits such as revenue from premium services. Skype was a major strategic gamble for eBay, which fumbled the ball when it bought whole-hog into the master M&A sales pitch of Niklas Zennstrom and Tim Draper. At the end of the day, however, Skype will become a good strategic vehicle for eBay - and a variety of “monetization” opportunities will emerge to generate plenty of revenue - contrary to what Nicholas Carr opines.

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Canadian E-Commerce Alive and Well?

June 30th, 2006 | 1 Comment | Posted in Main Page

Now, this is interesting: eMarketer has a story that e-commerce in Canada is thriving. According to Statistics Canada, e-commerce sales (public and private sectors) were $39.1-billion in 2005 compared with $28.3-billion in 2004. As well, the number of Canadian retailers with a Web site climbed to 42% from 38%. I'm not sure how StatsCan formulated their numbers but it would be interesting to see how Canadian consumers are spending their money online. Anecdotally, Canadians aren't the most enthusiastic online consumers. Part of the problem is the a chicken-and-egg situation. Canadians don't shop online so retailers are leery about setting up e-commerce sites, and because there's a lack of e-commerce sites because Canadians are reluctant to shop…and so it goes around and around. It is interesting that Canadian Tire operates one of the most popular retail sites but it is mostly used by consumers are a research tool. As a result, it is difficult to measure the site's success in terms of dollars and cents given many people will do their shopping at a retail outlet.

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Google Check-Out

June 29th, 2006 | No Comments | Posted in Google, Main Page

There's already lots of chatter about the launch of Google Checkout, highlighted by how it will be an eBay-PayPal killer. Not to dismiss Google Checkout's features, which seem interesting, but when was the last time Google launched a new service that kicked some serious butt? It may be Google doesn't look for home runs when it unveils something new. Instead, it could be more interested in slowly complementing its core search and AdSense efforts. Nevertheless, people would be wise to not get too caught up in the PayPal-killer rhetoric. Forrester analyst Charlene Li has an extensive review of Google Checkout.
Update: BusinessWeek has a story (July 10th edition) looking at how everyone gets excited about new Google services that fail to grab a market leadership position. The first quote is by Paul Kedrosky, who greets every new Google service with a healthy dose of pragmatism.

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Show Me the Strategy

June 29th, 2006 | No Comments | Posted in Main Page, Nortel Networks

My column in today's National Post looks at Nortel's need to spill the beans on where it's headed strategically. CEO Mike Zafirovski has been working away for more than seven months on his corporate makeover, and now analysts and investors want in on his master plan. By the way, Nortel's annual meeting is today.
Update: Here's my story in Friday's National Post on the AGM. It includes some interesting details about some new stock options granted to Mike Z. at a lower strike plan than the ones he received last year when he was hired.

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Even Six-Year-Olds Get Wi-Fi

June 28th, 2006 | 1 Comment | Posted in Main Page, Wireless, Wireless/Wi-Fi

A funny story from a friend that's far too good not to share. After picking up his son from an appointment, my friend gets into a conversation and lets his six-year-old son play with his laptop in the backseat of the car. When my friend starts to drive away several minutes later, his son yells “Stop!”. “What's the matter?,” my friend asks bringing the car to a quick halt. His son excitedly replies, “I've got a wireless [Wi-Fi] connection and I'll lose Nick Jr. if you drive away”. That's funny.

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Does Marketing Matter Within Web 2.0?

June 28th, 2006 | 7 Comments | Posted in Advertising/Marketing, Main Page, Web 2.0

I was reading a story last night about MySpace in the latest issue of Wired, and it twigged me about a discussion I had with my brother, Sean, about whether marketing really matters within Web 2.0. If you think about it, many of the biggest brands and most popular services - MySpace, Google, YouTube, PhotoBucket - were mostly created on the strength of low-cost viral marketing and word of mouth. There were no expensive advertising campaigns or well-crafted public relations initiatives. Instead, these companies offered compelling and useful services that resonated with consumers. So what role does marketing play within an environment that prides inside on low development, distribution and marketing costs? Is there room for hotshots like Tara Hunt, who expound new marketing theories for the Web 2.0 world. You could probably make a good argument that Web 2.0 companies with interesting and useful services can get away with a single marketing person (albeit someone who can wear a variety of hats). Instead of marketing campaigns, companies should just focus making their services, meeting the needs of users, and using nontraditional tools (blogs, podcasts, self-generated e-mails from the CEO when someone signs up for a beta, etc.) to build a community and create a brand. Of course, you could argue these are marketing tools but they are grassroots as opposed to hiring some slick marketing agency to "build" your brand.
Update: Ben Barren has a few bon mots about the Wired story while Om Malik takes the opportunity to highlight a Business 2.0 story he wrote on News Corp.'s Internet strategist, Ross Levinsohn.

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Nortel Slashing 1,100 Jobs

June 27th, 2006 | 1 Comment | Posted in Main Page, Nortel Networks

Surprise, surprise (well, not really), Nortel is cutting 1,100 jobs and reviewing its pension plan. The jobs cuts will reduce annual operating expenses by $100-million in 2007 and $175-million in 2008. The company also unveiled changes to its pension plan from defined benefits to defined contributions contributions to  defined benefits, which will save Nortel about $100-million a year. And everyone wondered why Nortel CEO Mike Zafirovski is so bullish about the company's prospects.

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Citron's Losing His Marketing Mojo

Vonage's post-IPO troubles must be weighing heavily on the shoulders of chairman and co-founder Jeff Citron. For the second time in two weeks, he gave a keynote at a conference that lacked any kind of sizzle. Brian Ward said Citron's speech at Convergence 2.0 failed to address any of the issues facing Vonage these days (growing criticism about its marketing spending, class-action lawsuits, discounts for subscribers who threaten to leave, etc.). With Vonage under siege, this is a time when you'd expect a marketing-wizard such as Citron to creatively and enthusiastically come to the company's defense. After all, he co-founded Vonage because he believed VoIP would be a disruptive technology. What happened to that chutzpah? Now that Vonage is public, itseems like Citron believes he has to behave. But if all you're going to do is give tepid keynotes with no meat, why bother talking at all because you end up doing more harm than good? One other thing, Citron declined to answer questions after his keynote. Strange because it's not like he's not good at avoiding questions he can't answer.

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Seeding the Blogosphere; Newspapers' Future

June 25th, 2006 | No Comments | Posted in Advertising/Marketing, Main Page, Media

Anyone with an interest in in the future of newspapers should give Shane Richmond's blog a read. A recent post on how newspapers should use their brands and resources (reporters, etc.) to seed conversation within the blogosphere is a rare example of someone within Old Journalism totally getting how to position traditional media for the Web. Richmond, a news editor with Telegraph.co.uk, argues many bloggers are commenting on content produced by news organizations such as newspapers. This is a positive news. Why? One, it suggests newspapers are still relevant within a Web World of Google News/Digg/Techmeme world; and two, it should, in theory, drive more traffic to newspaper Web sites as people search for news producers in addition to content commentators. This, in theory, should make newspaper Web sites more attractive to advertisers looking for strong, well-branded, credible destinations in a world where it is becoming increasingly difficult to sort through the moutains of content being created.
  As a journalist increasingly aware of the impact of the Web on the newspaper business, the last two paragraphs of Richmond's post are encouraging:

“To the naysayers, newspapers are surrounded on all sides. There are news aggregators to the left of us and wire services to the right os. But it doesn't have to the Valley of Death. If we shake off some old ways of thinking and begin to work with this new world instead of against it, we can build a better media.
We shouldn't feel we're surrendering to aggregators. We should be joining in. This is the most exciting time for newspapers for at least 20 years. If we stopped being so negative, we might actually enjoy it.”

Update: Slate's Jack Shafer piles into the newspapers are dying conversation with a doom and gloom story about shrinking newsroom and disappearing sections. He suggests, however, while newspapers are dying, there is plenty of demand for information, which ties into Shane Richmond's argument. Shafer suggests newspapers need to change their stripes and look at other platforms (cell phones, free tabloids, Web sites, etc.) to expand their audience. Here's an interesting paragraph:

“As much as people may have given up the newspaper habit, their appetite for news has become insatiable, [and] news companies are learning. The 1.1 million-circulation New York Times served 25 million unique readers in April via its NYtimes.com Web site, according to its own logs. Washingtonpost.com, which serves 80% of its audience outside the D.C. area, has made the Washington Post a national newspaper.

Shafer highlights what is becoming an increasingly obvious - but very difficult - strategic challenge for newspaper publishers, which need to start moving towards different platforms aggressively and with more urgency. Whether it's the Web, RSS, blogs, podcasts or cell phones, newspapers need jump into the digital information world - and not by launching Web sites that simply repurposed newspapers. Forget about online subscriptions, walled gardens or blogs that don't link out to other sources of information, the information world is changing. If newspapers don't adopt, they'll die.

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