The Last Round- Up

    
    Last month marked the demise of Hostess Cupcakes, Twinkies, Devil Dogs and a plethora of other popular brands from the 1950's including Wonder Bread. On November 21 Hostess Brands got final approval to close it's 33 bakeries and put 15 thousand people out of work.

     The company has had tough sledding over the last ten years. Ownership has blamed the union for the demise because they would not agree to any more concessions and the union naturally blamed management with top mangers continuing to get obscene bonuses while the business floundered.

     What hasn't been discussed however was the lack of innovation shown by this company. The snack segment of the food market was the fastest growing segment over the last decade. It has been growing at a pace greater than ten percent a year. Hostess made absolutely no effort to develop new products to cater to the shift in America towards healthier snacks. They could not even change their marketing campaigns.

     Hostess continued to sell it's products to the same people who ate them in the 1960's. This aging population no longer had the stomach for most of the foods produced by Hostess.

     Instead of changing it's products to attract a new customer base they continued as if the 1960's never ended. If they could have grown 10 percent per year which is the amount the total snack food segment has grown they would have had the revenue to meet their expenses and pay down their debt.

     Innovation is important for all businesses if they are to compete in today's global marketplace. It does not matter what your market share used to be. What matters more is what your market share will be next year.

    Instead of investing in new technologies and updated marketing techniques, Hostess management looked at shareholders profits above all else and led the company into the last round up.

   

Ball and Chain

   

   
      New York Times columnist Maggie Jackson has long been concerned about the direction our mobile society is taking. Now that we are reachable 24/7 does it give our employer total domination over our lives?
     People are tethered by smartphones and so insipid is this that most are unaware that it is even happening to them.
     People bought into the idea of 24 hour access when it looked like it would allow them to be free of a brick and mortar office. What happened was that those people now work more hours than ever.
     Maggie talks about three generations of a Baltimore family that owned a hardware store.Although most people would think that it would be a good thing to live a few steps from where they work, like the first generation of owners did, in reality they could not wait to move to the suburbs to put a little distance between them and the store. The hardware business overshadowed their lives.
     Two generations later, the cell  phone toting grandson blamed the portability of his work for his recent divorce.
      People are losing the balance between work and a life outside of work. Many employees admit to keeping a cellphone within reach when they go to bed. Some say they check it several times during the night.
     
      In her blog Maggie Jackson writes, "In courting the always-on livelihood, we're turning our backs on rich moments of full focus and absorption, in favor of darting restlessly back and forth between two or more complex streams of life. The integrity of a moment is lost when we unthinkingly blend different parts of our life."

     The question that can be asked is are we any more productive buying into this way of life or does it just seem like we are busier because we now have more ways to be distracted?

    You can read this article and others by visiting Maggie Jackson's blog     http://maggie-jackson.com/    

Behind the 8 Ball

    

This Friday, October 26th Microsoft will begin sales of it's new Windows 8 operating system. This version will differ from past versions of the product in that it does not have a "START" button. Instead there are multiple tiles on the screen similar to a smartphone screen.
     This is not the only departure in Windows 8. Windows 8 is optimized to be used with a touch screen. Depending on how well the public embraces this new OS it could mean the beginning of the end of mouse and keyboard based computing.
      This is a big gamble on Microsoft's part. since the new OS has a different look and feel over previous versions of Windows, there will be a steep learning curve involved. Add to that a touch screen and we could be looking at a pretty big investment in hardware.
     When Windows rolled out the Windows Vista operating system many businesses balked at adopting it. They cited additional expenditures in hardware since many older computers would only run the new OS very slowly. At minimum a memory upgrade was required and possibly a high end video card to leverage Vista's new desktop display.
     When polled, many businesses did not see a big upgrade in productivity with the new OS and Microsoft's new licensing scheme required a law degree to decipher. Many businesses opted to stick with Windows XP. In fact when Microsoft threatened to end support for XP many businesses banded together and deluged Microsoft with signed petitions. Microsoft relented and provided support for an additional two years.
     It will be interesting to see if Windows 8 users will report greater ease of use and functionality that would translate into greater productivity. Early reviews have said that it loads much faster than older versions of Windows. That is a big positive. It also has better search capabilities and for people who are already well versed with the iPhone or Android operating systems the learning curve may not be as steep as it has been said.
     As far as software is concerned, Microsoft will have a Windows Store similar to iTunes that will sell a collection of apps. The new software will not run on previous versions of Windows and will be redesigned for a touch screen environment.
     How this will play out in industry remains to be seen. More ergonomically correct workstations will be developed and a whole new line of products will have to be developed for the new operating system.
     If industry does support this product then perhaps the touch screen revolution will begin.

Apple Corps.

 

        Last Friday (October 5) marks the first anniversary of the death of Steve Jobs.

     It is unnecessary to write about how he shaped not only the home computer market but also the comsumer electronics market as well.

     What is noteworthy however is that at the time of his death, Apple stock was trading at 389 a share and Fridays close saw it at 638. It had closed at over 700 dollars less than a month ago.

     Jobs left Apple with a stable full of innovative products. Not only the iMAC and iBOOK personal computers but also the iPAD, iPOD and iPHONE. It appears that the company can still get some more milage out of these products.

    It will be interesting to see what the future will bring for the world's most valuable company. Will there be another product in the pipeline that will capture the imaginations of people around the world or will the Apple mystique die with it's creator?

Beta to the MAX

Sony Betamax

   
  Many years ago I shopped for a VCR. In the late 1980's the VCR was still an emerging technology. At the time these devices were expensive with a price tag of three or four hundred dollars.

     There was some confusion over just what exactly was a VCR . Sony introduced the Betamax in 1975 and in it's initial advertising campaign called it "The Time Machine" because you could record a television show and watch it at a later time. There were people who bought this product who later tried to sue Sony because they thought that the Betamax would actually enable them to travel through time.

     I did extensive research over what product I wanted to buy. I had seen demonstrations of many different models. I came to the conclusion that the picture quality of the Sony Beta machine was much sharper and clearer than even the most expensive VHS units.

     I had heard that the Beta format did not have the wide acceptance that the VHS format did. There were not as many prerecorded tapes available for the Beta format.There were not many video stores that rented Beta tapes. However, there was a video store near my house that carried both formats and I never came across a time when a title I wanted to see was not available in Beta.

     Sony also produced a handheld video recorder that supported the Beta format. Because the Beta cassette was smaller than the VHS cassette it could fit inside the unit instead of having to end up in a separate unit that was tethered to the camera with a cable.

    I had a friend that was in the VCR repair business and he told me that the Beta unit was more reliable than the VHS unit. He explained that the tape path in the VHS unit was more complicated and as a result lots of times the VHS unit would "eat tapes".

   Esquire magazine publishes an annual list of whats in and whats out. That year they said "Beta is in,VHS is out"

    I ended up buying a Beta machine. It served me well for many years. I rented many tapes and also recorded many shows off the air. The device was fairly easy to program. You just had to remember to leave it turned on.

    As time went on however, market forces squeezed the Beta out of existence. The video store that rented the Beta tapes went out of business and the big stores like Blockbuster didn't carry Beta tapes.

    VCR's came down in price so much that I was able to afford to buy a VHS machine. I used the VHS machine to watch prerecorded tapes but still used the Beta machine to record programs off the air since the picture quality was still better.

    I knew that Sony was throwing in the towel when it announced that it would produce it's own VHS recorder. It was soon after that that the Beta machine was discontinued altogether.

    I guess this is a textbook example of a superior technology that entered the market ahead of all competition and still ended up failing in the long run.

    In hindsight we can look at Sony's inability to hold on to their dominant position in the market. Their unwillingness to let other companies use their format without charging a royalty fee is a major reason for that. The worldwide demand for the VCR was so great that Sony and the few companies that produced Beta machines could not produce nearly enough units. JVC and the other VHS producers flooded the market with VHS machines. As a result, the ancillary products such as tapes were also produced more for the VHS format.
     They also failed to cultivate relationships with the major movie studios.They also could have cultivated relationships with video stores.

     We all know how this ends. DVD's emerged as a superior technology and cable television boxes come equipped with the means to record directly off the air. The VCR has become obsolete.

Moore for Less

As a computer science student 18 years ago I did research on the evolution of the computer. I used a report prepared by Syracuse University for the Airforce in 1966 long before the personal computer was developed. They predicted great gains in computer performance while at the same time predicted a steep drop off in operational costs associated with computers. These predictions are as follows:

                              Today (1966)                Today Plus 10 Years                    Gain

Add Time (ns)          800                                        50                                   16 times faster

Reliability (hours)      300                                        9000                               30 times more reliable

File size
(millions of                 230                                     1000000+                         4348+ times bigger
characters)

File cost          
(cents per                  100                                          0.4                                250 times cheaper
character)

 
We all know how this story ends. In todays world the computer is many times more powerful than could be imagined fifty years ago. They have become inexpensive enough that the average person can afford to have one. There are laptops and tablets that bring a dimension of portability to computing. There are also smart phones that represent the junction of communications, data processing, video and audio all in a device that can fit into a pocket.

Moore's Law states that computer processors double the density of transistors every year. This study might be considered the precursor to Moore's Law.

In retrospect, the computer industry has not only advanced at breakneck speed but has evolved in ways that could not be imagined 50 years ago.

The Skys the Limit?

 

 

 Today the price of a share of Apple Computer stock hit $700 a share. It is a testament to the late Steve Jobs and an affirmation that sizzle sells.

     When you strip away the fancy enclosures and forget about the Apple mystique what you are left with is a computer that is not any better than a Dell or HP made product. The Apple operating system boasts ease of use as one of it's main features. What is not mentioned is the fact that it does not scale well to a large environment or that replacement parts are very expensive.

     This does not appear to slow down the rabid loyalty that Mac users have towards Apple products. Every time a new Apple product is introduced, hordes of Apple users flock outside Apple stores to make sure they are the first to get the new device.

     This phenomena supports the theory that the newer a technology is, the greater the company's profit margin is. This is why Apple introduces new products every few months and has just enough new features that the public will gladly discard their old iGADGET and buy a new one.