PS3 Gains Steam: Back in the Race

I'll give credit where it's due, and Sony deserves some for taking its struggling PlayStation 3 gaming console, and injecting new life into it by dropping prices. Since the company chopped the price of the 80 GB unit to $499 and introduced the $399 40 GB version, demand for the PS3 has magically increased. According to PC World, combined sales at the top 10 retailers in North America have increased by a whopping 192%, and have more than doubled overall. Reports also indicate that the PS3 outsold the Wii in Japan during the month of November.

Kudos to Sony for biting the bullet, and making a move to help remind gamers that the PlayStation 3 is still out there. However, as PC World points out, these drastic measures mean Sony will be losing money from every PS3 sold. The report says that Sony hopes to offset these losses by increasing market share and adding new game titles. However, just recently, the company slashed the price of its developer kit to help attract more third-party titles for the console. Can a healthy profit still be made by games offered at half the development cost?

The PS3 won't appeal to the same, growing "family" market that is eating up the Nintendo Wii. The "serious" gamers were enjoying Microsoft's Xbox 360 a whole year before the PS3 even saw the light of day. Those who really wanted the PS3 sat in line for hours, and even days, to be one of the first to snag it. Obviously cutting the price by about $150 opened up a new group of customers that were just waiting for more affordability. But can the PS3 keep it up? The holiday shopping season will be a prime indicator of its likely market position for 2008.

Nevertheless, congrats to Sony for managing to generate new interest in the PS3. The three-way console race just got a lot hotter!

Huge Leaps Made in Fostering New Competition in the Wireless Arena

I've been saying for some time now that we need more competition in the Canadian wireless industry, and now it finally looks like we might get it. On May 27, 2008, an auction will be held for the Advanced Wireless Services (AWS) spectrum, which is essentially the airwaves required for cellular service to operate. The Canadian government's Ministry of Industry, the Honourable Jim Prentice, said yesterday that 105 MHz of radio spectrum would be made available: 65 MHz will be offered to the existing players so they can build upon advanced features and services. But the big news is that 40 MHz will be set aside exclusively for new players. Needless to say, it's a happy day for any company trying to get its foot into the door of the Canadian wireless arena.

Of course the current wireless players, Bell, Rogers, and Telus, aren't too happy about the decision.

"Telus is deeply disappointed with the Government's decision on the rules for the upcoming AWS auction," said the company's Executive V.P. or Corporate Affairs, Janet Yale. "It is inconsistent with this Government's stated policy of relying on market forces to deliver benefits to Canadian consumers. It also rewards companies that have both the resources and the motivation to bid openly for new available spectrum. As a consequence, Canadian taxpayers will receive less than full market value for the new spectrum."

The current players feel that the fair method of auction would have been to give the open spectrum to the highest bidder. Hmm...who would such a decision favour? Oh yeah - the guys with the big bucks! It would be like putting a gun into Tony Soprano's hand, then asking a bunch of wanna-be gangsters to fight him. Of course you have a chance guys...just try your best! Is this fair? I'd say not, as does Mr. Prentice.

"We want to ensure that new entrants have the same opportunities and the same access to networks and infrastructure as existing providers have had in the past and have today: no more, and no less," he said. Prentice added that the three current providers control a whopping 95% of the market right now!

Prentice also pointed out something that I, and many studies, have noted in the past: that Canadians pay more for our wireless service than most other countries; especially when it comes to data like Internet and e-mail access. If new carriers are added to the mix, pricing could consequently come down as each carrier is forced to fight much more aggressively for consumer's bucks. And with number portability available in full force in Canada (the ability to switch from one carrier to another, but keep your current telephone number), new players entering the market could mean a major shake-up in the industry.

"The introduction of new service providers will help make Canada's wireless market more dynamic, more competitive, and more innovative to meet the growing needs of Canadians," Minister Prentice added.

I commend the Canadian government on this decision: it's about time! Let's keep our fingers crossed that we see a new, rejuvenated wireless industry in 2008 and beyond. Perhaps then, Canadian customer's level of satisfaction with their wireless service will be a little less abysmal than it is today.

[Photo: Industry Minister Jim Prentice announces details of the upcoming AWS spectrum auction to be held on May 27, 2008.]

Cyber Monday Shoppers Go Wild

Cyber Monday is the Monday after the U.S. Thanksgiving long weekend, and is named as such because of shoppers' tendencies to head to their computers for some post-turkey online shopping. This year was no different, with a total of 72 million shoppers expected to have made online purchases that day (according to a study conducted on behalf of Shop.org, the Website that named the day "Cyber Monday"). This is up from 60.7 million in 2006, and 59 million in 2005. What I infer from these figures is one of two things: more people are shopping online, or more people are shopping period. Either way, the point is that more people are shopping.

Although "official" figures for Cyber Monday haven't yet been released, the National Retail Federation (NRF) says that CyberMonday.com, a Website that compiles promotions and deals from more than 550 online retailers, tracked three times more traffic by 1 p.m. in the afternoon on that day than it had in the previous year. That equated to more than one-million visitors in just the first 13 hours of the day!

Cyber Monday is such a hit in the U.S. that the NRF holds a Shop@Lunch event in Washington, DC, where workers can surf for the best deals while munching on some mid-day grub. This is probably a good idea, since the Shop.org survey (which was conducted by BIGresearch) discovered that 54.5% of workers with Internet access planned to shop from work. So hey, why not encourage them to do so on their lunch hour rather than using up valuable company time to find the latest Tickle Me Elmo for their nieces and nephews? Surprisingly, men were dubbed more likely to shop while at work than women (57.3% vs. 51.7%). Not surprisingly, young adults, aged 18-24, were the most likely to do so at 72.9%. This year, more than 200 people attended the Shop@Lunch event in Washington.

In addition to offering neat promotions and deals, 24.7% of online sites offered free shipping for orders placed on Cyber Monday. As mentioned in a previous blog entry, 72.2% of online retailers planned some sort of promotion for the day, up from just 42.7% in 2005.

When shopping becomes an organized event at work, you know that the industry is on to something big.

[Photo: A few office workers attempt to snag the best online deals while attending the Shop@Lunch event that took place in Washington, DC on Cyber Monday: November 26.]

Keeping Track of the High-Definition DVD Format War

Trying to keep track of the high-definition DVD format war is like trying to keep tabs on the invisible man: it's a constantly moving target, and I have no idea where each format is at any given time. Sales of hardware and software, market penetration, movie studio and retailer support, all of which will help determine a "winner", are all consistently shifting. Not to mention that, depending on the source, different numbers are reported everywhere.

Hardware sales in one country are higher for X format; but if you look at numbers from a specific region, Y format is actually doing better. Meanwhile, software sales for one format in a particular store are triple that of the other format; but sales in a much larger retail outlet are double, which equates to much more when you look at the bottom line. It's like high school math problems all over again!

With that said, I thought I'd add some fuel to the fire, and increase the complexity of this math problem. The latest numbers I've received (from the RetailBRIDGE) say that the North American HD DVD Promotional Group is reporting that 750,000+ HD DVD players were sold in the U.S. this past Black Friday weekend. This includes both standalone players (like the one that was selling in Wal-Mart stores for US$99!) as well as the add-on drive for the Microsoft Xbox 360 gaming console.

I haven't heard any comparable figures about Blu-ray player sales throughout the weekend, but I'm sure they're similar in some fashion. It will be interesting to see how HD DVD and Blu-ray software titles sold during the weekend, especially since the National Retail Federation claims that books, CDs, DVDs, videos, and video games accounted for 41.7% of purchases that weekend.

As for the format war itself, if this busy, holiday shopping season doesn't put an end to the fight come early 2008, I don't know what will. But I might just have to track down my old math teacher for some help in figuring out which format is actually in the lead.

Should Sirius & XM Merge?

Should satellite radio providers Sirius and XM merge in the U.S.? This has been the question on many minds over the past few months, as the companies, their investors, and the Federal Communications Commission (FCC), go back and forth on the issue.

On the one hand, a merger would unify the two competing brands, allowing them to more effectively compete against other forms of music entertainment, which range from standard, terrestrial radio, to streaming Internet radio, digitally downloaded tunes, store-bought CDs, and even the relatively new HD Radio format. On the other hand, Sirius and XM are technically the only two providers of satellite radio technology in the U.S. (not to mention Canada), so a merger would see them effectively competing against, well, no one. Without competition, one really has zero incentive for providing attractive promotions and pricing.

According to SkyREPORT, several groups, including the Consumer Federation of America, Consumers Union, and Free Press, are urging the FCC to reject the proposed merger. I often find myself in opposition of large lobbying groups (like those that wish to impose a levy on hard drive-based music players or pretty much those in favour of stifling technological innovation in any way), but I'm actually on the side of these groups this time. Competition is good for the consumer and good for business. The satellite radio arena needs it in order to remain fresh, and work toward giving consumers a valuable reason to switch from standard radio to a paid, commercial-free service.

I do understand that, although Sirius and XM are the only two satellite radio providers in the race, they are technically competing with other services: terrestrial radio in the car, streaming Internet radio in the home, for example. In that case, they would indeed have to offer some sort of incentive in order to get customers to pay for their radio service, whether there was only one provider, two, or 20. But then we can take it one step further and say they're also competing with iPods, because these nifty players can easily dock in a car to playback tunes through the vehicle's audio system; and manufacturers like Sonos and Squeezebox, which provide hardware that makes streaming tunes throughout the home just as easy as docking your satellite radio receive with your stereo system. Where do we draw the line? More important, if a significant chunk of consumers get hooked on satellite radio, where, then, is the incentive to offer better deals that go beyond "commercial-free music"? Even though the companies would likely operate independently from one another, the bottom line is that, if there's only one provider, why bother with great promos that we might have otherwise seen in the market?

The situation can be likened to GSM phones in Ontario, which I've mentioned before in previous blog entries. If a customer wants to move to a new GSM carrier, his choice is limited to Rogers or Fido, the latter of which is owned by the former. Sure, a customer could always just opt for CDMA and go with another carrier altogether; but if he wants GSM for its world-roaming capability, or perceived better reliability, he has one option.

The groups cited above claim that a merger would "reduce the number of channels and formats available, and result in fewer cost-saving incentives." They add that without competition, the industry would see a "dramatic drop in spending on talent and retail". Here, here.

TiVo is Here!

I've always wanted TiVo, and to be honest, I'm not quite sure why. I have a set-top box at home with a built-in PVR that lets me record TV programming on the fly, set future recordings, and pause, rewind, and fast forward live TV. But yet I've always wanted one of those "cool" TiVo's that they talk about on American TV all the time. Maybe it's sort of like the iPod vs. every other portable audio player on the market. They all essentially do the same thing: let you listen to digital tunes (and sometimes video) while on-the-go, or through a home audio system or separate speakers. But the iPod arguably does it best, with an easy-to-use, and quite sexy interface. Is that what TiVo promises?

To be honest, I don't know because I've never had the chance to play around with one. Well now, I just might. The company has confirmed its entrance into the Canadian market, and now I feel like an anxious Mac-addict that salivates every time he sees the iPhone commercial. We've waited so long for this device to come to Canada, I was beginning to think that Canadian broadcasters might have to bleep out the word "TiVo" every time it was mentioned and voice-over "PVR" just so we wouldn't feel left out.

In the U.S., "TiVo" has become much like the terms "Kleenex" for tissues and "Xerox" for photocopies, both of which are actually brand names, not products. The same thing happened with the Sony Walkman in the '80s, where virtually every portable player, whether made by Sony or not, was simply lumped into the "Walkman" category. When it comes to TiVo, I, in Canada, will say I missed Dexter last night, but no worries: IPVR'd it; while U.S. TV watchers are more likely to say I missed Dexter last night, but no worries, I TiVo'd it! Do you catch my drift?

Back to TiVo in Canada: although the box that will be available in early December ($199) does not support high-definition signals, up to 80-hours of standard definition content can still be recorded for later viewing. A reader to our news Website http://www.marketnews.ca/ commented that the move is "a day late and a dollar short", stating that, since so many people have already converted to HD, they won't bother with standard definition recording. Au contraire, I say. There are tons of consumers out there that haven't yet bought into the HD craze: in fact, the penetration in Canada is projected to be just about 48% by the end of this year, according to the CEMC. Even so, I'm an HD viewer, but I'd rather record a program in SD than not record it at all (of course I'd prefer HD if given the option).

A subscription will cost $12.95/mo. (in U.S. dollars, not that it makes much of a difference), or less depending on how many years you sign up. As for compatibility, a press release issued by TiVo says that it's "optimized for cable households". A TiVo spokesperson tells me that it will also be compatible with satellite boxes; and dial-up Internet connections (albeit with the turtle speeds that dial-up users have become accustom to).

Maybe it's marketing. Maybe it's U.S., pop culture TV. Maybe it's the same juice iPod-fanatics are drinking. But I'm happy to see Canada added to the TiVo culture. Better late than never, as they say. Next up: the iPhone. We're waiting....

Results are in for Black Friday: Less Money, But More Shoppers

There's likely one question on everyone's mind this Cyber Monday: how did the Black Friday shopping extravaganza pan out in the U.S? Aside from playing a large part in U.S. retailer revenue for the year and holiday season, Black Friday provides a glimpse into what the year's holiday shopping season might be like overall. According to the National Retail Federation (NRF), the number of shoppers during the Black Friday weekend was up 4.8% to 147 million; but dollars per shopper were down 3.5% to US$347.44.

This isn't necessarily a bad thing. What it means is that there were more people shopping for smaller-ticket items rather than large purchases. Not to mention that the average selling price of many high-ticket items (especially flat-panel TVs) has dropped considerably since last year.

NRF President Tracy Mullin says that hot items this Black Friday were things like digital photo frames, laptops, and cashmere sweaters. Last year, the coveted items were higher-ticket buys, like high-definition TVs. Perhaps consumers have a more giving nature this season, having purchased something for themselves last year. This year, men shopped more than women, outspending them at $393.63 vs. $303.95.

Encouragingly, consumer electronics items accounted for 35.7% of the purchases. Books, CDs, DVDs, videos, or video games accounted for 41.7%. This will likely contribute to a welcome upsurge in final sales numbers for the CD and DVD market, which has been plagued by piracy and counterfeit materials for years. The most popular items included clothing and accessories at 46.8%. Other "hot" shopping items were toys (28.2%) and gift cards (21%).

Sales also started earlier this year, as more stores decided to open at midnight (and even earlier!) The strategy seemed to work, as 14.3% of consumers left the house to shop prior to 4 a.m.; up from 12.4% last year.

"Knowing that consumers would be challenged by the current economic environment, retailers hoped that higher traffic would offset lower individual spending, which it did," explained Phil Rist, Vice President of Strategy for BIGresearch, which conducted the poll for NRF. "...The holiday season is off to a good start."

Although discount stores led the pack, snagging 55.1% of the shoppers, it was nice to see that specialty retailers came in second at 43.2%. Traditional department stores received 38.7% of the traffic, while Websites welcomed 31.6%.

Today, nicknamed "Cyber Monday", will extend the deals to the Web, and will contribute more sales to the bottom line of what looks to be a positive holiday shopping season. Although NRF is still sticking to its estimation of a 4% rise in holiday sales this year, Mullin advises that final holiday shopping results won't be available until the last two weeks of December. Stay tuned.

Black Friday Update

According to the National Retail Federation (NRF) there isn't much to report just yet about Black Friday: it turns out no "preliminary" results will be released at all (they used that term mistakenly). But I did promise to follow up once the statement was made, so here it is.

NRF had previously projected that sales would rise 4% when compared to last year, for a total of US$474.5 billion, and is sticking with that estimated figure thus far. NRF spokesperson Scott Krugman tells me that final Black Friday results won't be released until Sunday, November 25.

For now, what we do know is that the best deals were found on electronics (especially flat-panel TVs), jewelry, clothing, and toys. But discounts were also being offered on small-ticket items that are ideal for gift-giving, like digital photo frames, hand mixers, and sterling silver jewelry.

"While many of these items will remain popular during the holiday season," said NRF President and CEO Tracy Mullin, "there is strong interest in them today simply because the prices are irresistible."

To pass up turkey and stuffing for long lines in freezing weather (especially in cities like New York where it felt like -2 at midnight!), the deals must be pretty darned irresistible, indeed!

In the online arena, NRF says that 72.2% of retailers plan a special promotion for what's known as "Cyber Monday", which is a drastic increase from the 42.7% just two short years ago.

Happy shopping to our neighbours to the south!

Happy Black Friday!

It's Black Friday today, and many U.S. stores opened long before any of us had risen from slumber. The National Retail Federation (NRF) predicts that 132.9 million Americans will shop this weekend, including Saturday and Sunday in addition to today. Many of these shoppers will fall into the 18-24 age bracket. Will this year's Black Friday compare to 2006?

Reuters reports that the Palisades Mall in New York City opened at 3 a.m., and lines had quickly formed at stores like Apple, Macy's, Old Navy and Circuit City. J.C. Penney opened to the public at 4 a.m., Toys R Us and Best Buy at 5 a.m., and Macy's at 6 a.m. In Geneva, IL, a line-up of about 150 people was cited to be in front of the Best Buy store, while big crowds had arrived at Sears and Kmart stores in the area to snag great deals on items like digital cameras, TVs, and toys.

In California, the San Francisco Chronicle says that people in the Bay Area were already forming lines yesterday at stores that weren't set to open until 4 a.m. today! CompUSA decided to start the festivities early, and began operation at 9 p.m. on Thursday.

Meanwhile, over in Washington, L.L. Bean is opening a full 24 hours a day from now until Christmas Eve (December 24), says the Washington Post. J.C. Penney and Kohl's opened at 4 a.m., while Kmart employees got to sleep in until 7 a.m.

MarketWatch reports that the number of GAP outlets scheduled to have opened at midnight was more than double the number last year.

What's really disturbing is those anxious shoppers who have waited in line the night, or even several nights, before Black Friday in order to take advantage of the best deals. Whatever happened to a nice Thanksgiving meal? It seems to be more like "rub-a-dub-dub, thanks for the grub, I'm outta here to buy a TV!" Anyway...

The NRF's President and CEO is scheduled to release preliminary Black Friday results today at noon. I will try to follow up with these results and report them here.

As for the shopping frenzy, I've inferred two things from these results:

1) people seem to be seeking out, more than anything else, electronics, clothes, and toys. (That, or these are where the greatest deals can be found). And

2) if people are leaving the house at midnight to shop, it seems that one thing they are thankful for is money in the bank!

[Photo courtesy of http://www.freedigitalphotos.net/]

The Internet Might Reach Total Gridlock

Have you ever seen those hilarious Malibu Rum commercials set in the Caribbean with the slogan "Seriously Easy Going"? They're humorous parodies on the fast-paced North American lifestyle. In one of the original commercials, a man riding a bicycle is waiting for a large bus to move out of his way, and remarks that the situation is "total gridlock". This is exactly what I thought of when I read a new report by Nemertes Research that warns the Internet could reach capacity (or gridlock) within the next three-to-five years. What does this mean?

According to Nemertes, it means that we could encounter Internet "brownouts", slower-paced services, and difficulty in accessing specific content. The reason is the growing popularity in more bandwidth-heavy content, like streaming videos and music downloading; as well as the increased use of the Internet on portable devices, like mobile phones.

"The Internet is inherently self-protecting," says the company's President and senior founding partner Johna Till Johnson. "You can't push more traffic onto the 'net than it can handle."

Nemertes claims that the industry needs to invest 60-70% more on broadband access capacity than they plan to (total investment should be about US$137 billion vs. just US$72 billion in order to meet demand!) By 2010, predicts Nemertes, the Internet's capacity will not be able to support user demand.

The company likens the situation to an open highway (i.e. the high-speed connections) and busy local roads (i.e. lower-speed, copper and coaxial connections). "If the freeway is empty but local roads are congested," the firm explains, "users will spend most of their time stuck in traffic at the edges."

Is this another Y2K scenario, where everyone panicked and nothing happened? Or will this be like the electricity situation in Ontario a few years back, where we did in fact experience "brownouts" in order to conserve depleting power resources? Either way, this study certainly sheds light on an important worldwide resource, and what might need to be done in order to keep it running successfully. Every day, more and more services are turning to the 'net as a means of distribution. According to comScore, almost 75% of U.S. consumers watched 158 minutes of online video and more than 8.3 billion video streams in May 2007 alone. Let's make sure these numbers can continue to increase without catastrophic repercussions.

On a humourous note, click here to see the funny Malibu Rum commercial on YouTube.com.

Black Friday LCD/Plasma Deals

I just received a note from Consumer Reports that helpfully compiled a list of where U.S. customers will be able to find the best Black Friday deals this weekend. Of course, us Canucks support our own homegrown retailers. Nevertheless, I thought it might be interesting to outline a few of the most jaw-dropping deals being offered south of the border (all prices are in U.S. dollars, of course):

Would you believe that a 42" HD (720p) plasma would be available for $900? It is. Best Buy will be selling Panasonic's TH-42PE7U for that price, as will Sears be offering LG's 42PC5D. Even more shocking is that Costco is reportedly advertising a 58" 720p Panasonic plasma for "$500 off"; while CompUSA will offer Samsung's 50" 720p HP-T5044 for US$1,300.

Kmart will sell a 32" Olevia LCD for a measly $420; while 37" models will be available between $550 (Target) to $600 (BJ's). Sharp's 42" 720p LC-42D43U LCD will go out Circuit City shop doors for just $800, while the 46" 1080p LC-46D64U will be just $500 more at $1,300.

What's even more unbelievable is the fact that many retailers have already begun offering what could be considered "pre" Black Friday sales, like Wal-Mart offering the Toshiba HD-A2 HD DVD player for just $99; and Sears already selling Hitachi's 42" 1080p P42H401 for just $770!

Considering the massive headache one would have to endure by knocking elbows with swarms of consumers, waiting in horrendous lines, and fighting with the guy next to you for the last TV in stock, is it all worth it? I guess it'll make for a nice work-out after U.S. residents have just gorged on excessive amounts of turkey and stuffing (a TV report I saw the other night estimated that the average American would intake 5,000 calories on Thanksgiving night!)

As for us Canucks, we had our fill of turkey a month ago. And with the Canadian dollar continuing to hover around par, we can probably expect some pretty nifty Boxing Day deals once the holiday season has concluded.

Online Content Distribution Issues Slowly Smoothing Out

Since the Internet has become a major means of obtaining content of all kinds, it has been rife with issues relating to unauthorized content distribution. We still have a long way to go for these issues to fully smooth themselves out: after all, it's incredibly easy to get whatever information one wants onto the Internet for literally the entire world to see! But we're definitely on the right track.

Just today, music studio Sony BMG made a deal with Yahoo with regards to the use of its music and videos in user-generated content that's uploaded to the site. Yahoo will give Sony a cut of its advertising revenue, and Sony BMG will permit its artist's material to be used in content that appears on the site. Finally a deal that makes sense and is working toward the consumer's interests, not against them.

Encouragingly, this isn't the first of such deals to come down the pike: Sony BMG has already made a similar deal with Google and its popular YouTube property; while NBC Universal and News Corp. said earlierthis year that it would create its own Internet video distribution network that would feature thousands of hours of full-length programming, movies and clips from at least a dozen networks and two major film studios.

Meanwhile, popular sites that feature user-generated content, like Yahoo and YouTube, are working vigorously to employ content filtering technologies that would weed out anything that uses unlicensed copyright material. And music downloading Websites and music studios, like iTunes and EMI, are finally beginning to embrace DRM-free content. In terms of the current Hollywood Writer's Guild strike, which is fueled by the writer's feelings that they aren't being appropriately compensated for content distributed online, rumour has it that the parties are back into negotiations. This is the kind of progress that is very encouraging: don't try to hinder technological development; work with it.

On another note, there are still naysayers that simply won't embrace the changing way we consume content. Famed record producer Jermaine Dupri is one of them, having gone on a rant in the Huffington Post about the state of the music industry. He feels that consumers should buy an entire album if they want one song: that's the way it always has been, and that's the way it should remain. I understand his point that an album is created to tell a story as a whole, and a lot of work goes into creating the "work of art", but to say that sites like iTunes are "helping customers destroy their canvas" is a bit of a stretch. I guess the "random play" option on any CD player or music system should be squashed as well, because this often leads to only a few tracks off each inserted CD playing within a set.

I digress...

Vonage Owes Over $200M

I have either been living under a rock for the past few months, or just simply can't keep up with all of the industry news. Just yesterday, it was brought to my attention that VoIP provider Vonage is tied up in a legal battle with Verizon over three alleged patent infringements. After appeals, the latest news is that Verizon Wireless won the case, and Vonage has to pay a grand total of US$120 million to the wireless phone provider. Ouch.

What makes the situation even worse for Vonage is that the company recently settled two other litigation cases with AT&T and Sprint. On October 8, Vonage settled a suit with Sprint in relation to six patents in its "voice over packet patent portfolio." Vonage was to pay Spring a total of US$80 million to cover licensing for past and future use of the technology. A few weeks later, Vonage settled a dispute with AT&T over "packet telephone system" patent infringements, leading to a payment of US$35 million over the next five years.

Basic math would indicate to me that the company might just be in a tad bit of trouble. Vonage's just-released Q3 2007 results report just US$211 million in total revenue.

It's a shame, because I really think we need more competition in the telephones arena, whether it be landline, Internet, or wireless, not less. I tried out the Vonage service in its early days, and thoroughly enjoyed using it. It was simple, convenient, and compared to a "regular" home phone plan, much, much cheaper. Customers who often make long distance, and even international, phone calls, will especially save tons of cash by jumping on the VoIP bandwagon. Of course, like any other service, it does have drawbacks: the most obvious is that, if your broadband Internet connection goes down, so will your phone. But with 70%+ wireless phone penetration in Canada, and broadband services becoming more reliable by the minute, this probably isn't such a huge deal. Hopefully Vonage will pull through, and come out with some great, new offerings in 2008! VoIP could very well be the way of the future in voice communication, and the more options the consumer has, the better.

Let the Holiday Shopping Begin!

If my experience this past weekend is any indication, holiday shopping in Canada certainly isn't suffering too much in wake of the Canadian dollar. I made the mistake of attempting to step foot into the busy Toronto Eaton Centre, and was nearly buried alive by a sea of shoppers, shopping bags, and child strollers. There were actual line-ups just to use the escalators! Granted, this Sunday was the famous Santa Claus parade, plus the Raptors were playing at home, so both events likely contributed to the magnitude of mass hysteria.

Nevertheless, despite how frustrating it was to work my way through the crowds to reach the few stores I actually wanted to visit, it was nice to observe that shopping is alive and well in one of Canada's busiest cities.

On another note, I noticed that the Music World store was advertising a "going out of business sale". I popped my head in, and saw that CDs were being offered at 10% off (a few at 30%). Not bad.

Meanwhile, shoppers in the U.S. are gearing up for Black Friday, which takes place this Friday, November 23. Black Friday is known as one of the busiest shopping days of the year, with absolutely jaw-dropping deals, and a shopping frenzy that would make the Eaton Centre on the afternoon of December 24 look like a ghost town.

[Photo courtesy of http://www.freedigitalphotos.net/].

PS3 Slices Developer Kit Price in Half to Attract Game Designers

Last month, Sony dropped the price of the 80 GB version of its PlayStation 3 gaming console to $499 (from $659), and replaced a 60 GB version that was selling for $549 with a 40 GB version that's now available for $399. Now, the company is taking the price drops to the developer arena by chopping the price of its software development kit in half. This is an obvious attempt to bring more developers on board, and create more enticing game titles for the struggling console.

According to BBC News, many developers that had previously created games for the extremely popular PlayStation 2 unit have now moved over to the Nintendo Wii camp because it's easier and less expensive, not to mention arguably the more popular unit.

I'm not quite sure what has caused the PS3 to encounter so much difficulty in the market, especially considering how popular its predecessor was. Many have speculated a myriad of reasons: high-price, the inability to meet demand at launch, the fact that it came to market almost a year after the still popular Xbox 360, etc. Another reason was an unexpected one: the popularity of the family-oriented Nintendo Wii, which has opened up a whole new and untapped market for gaming that is clearly a very lucrative one. It is likely all of these factors that have made it tougher for the PS3 to experience the market-leading longevity that the PS2 enjoyed for many years.

As the Wii and Xbox 360 continue to ramp up offering, the battle for Sony to get customer's bucks will remain a difficult one. Microsoft just launched the ability to download games via the online Xbox LIVE service, which will make the '360 an even more enticing option for gamers of all kinds.

In related news, Sony celebrated the one-year anniversary of the PS3 last week. Rather than noting its current position in the video gaming market, the press release that was issued explained that "...the company is already seeing strong sales momentum as a result [of new hardware and pricing]; PS3 sales have increased by 192% at the top 10 retailers in North America."

The positioning of the PS3 this holiday season will not only help determine Sony's future success in the video game arena (with this particular console, at least), but it will also have an impact on the ongoing Blu-ray and HD DVD battle. The PS3 has a built-in high-definition Blu-ray player, and thus its sales have contributed to the overall total of Blu-ray players sold worldwide. For both Sony and the Blu-ray camp's sakes, I hope the PS3 enjoys healthy sell-through this holiday season!

Canadians Aren't Happy With Cell Service

It seems Canucks can't make up our minds about whether we're satisfied with our cellular services or not. In 2006, J.D. Power and Associates reported that our level of satisfaction with both service providers and handsets improved from 2005. But the 2007 study is singing a different tune, citing that our satisfaction has decreased "considerably" over the past year (18 points, to be exact).

What's the reason? J.D. Power suspects customer expectations, in general, which I'm not buying. We've seen tons of new 3G technology offerings from every carrier, plus sleek and sexy handset designs. Rogers Wireless even introduced video calling this year, a North American first. What more do customers want? Maybe Canadians are upset because we don't get to snag the coveted iPhone just yet, but there's still tons of other neat options out there!

The other reason cited is cost. "Although an array of new service plan features, bundling options, and ways to reduce package prices have been made available in 2007, customers indicate that they are dissatisfied with the cost of these services," explained Charles Schade, Senior Director of Research at J.D. Power and Associates. That reason I might buy.

Although industry pundits have tried to convince me that service in Canada is actually cheaper than it is in the U.S., any Web search I conduct brings up tons of results from bloggers, consumers, or third-party research sites that beg to differ. The Canadian Wireless Telecommunications Association (CWTA) references an Organization for Economic Co-operation and Development (OECD) study that claims Canadians in fact do have the lowest wireless prices in North America. But, as I mentioned in the October issue of Marketnews Magazine, this excludes "high-usage" customers. I'm no statistical analyst, but I'm pretty sure the high-usage customers represent a significant chunk of the Canadian customer base. In fact, a recent CWTA study reveals that Canadians chat for, on average, 400 minutes per month.

Customer dissatisfaction aside, there are a few carriers and handset manufacturers that received kudos. For the first time in the history of J.D.'s study, Fido topped the list, fueled mainly by its attractive service plan options and pricing structure. Sasktel and Aliant followed at a close second and third spot, respectively. In 2006, Sasktel was first, Fido second, and Aliant fourth (Telus snagged the third spot).

When it comes to prepaid service providers, Sir Richard Branson's company Virgin Mobile took top spot for the third year in a row, followed by Telus and PC Mobile. (Aliant and Telus were second and third, respectively, last year).

What's interesting is that the average monthly fee a contract customer pays per month descreased by $7, from $74 in 2006 to $67 in 2007. Either customers are opting for cheaper plans, or simply not using their phones as often as before.

Congrats to Sony Ericsson, which climbed to the number-one spot in mobile phone brand satisfaction, all the way from fourth place last year. LG, which was ranked number-one in 2006, oddly fell to number-five. Blackberry ranked second, followed by Sanyo, and Samsung, in that order. Blackberry received a gold star for operability, while Sanyo can puff its chest in the durability race.

If mobile phone carriers can get anything out of this study, it's to place greater focus on satisfying customers, both existing and new. Number portability (this is the ability to switch carriers but still keep your existing number) + customer disstisfaction + expired contracts could = lost business. As for the handset manufacturers, keep pumping out those neat and sexy designs, and please run extensive hands-on tests of the phones before they're brought to market: I'm floored sometimes with how the most advanced phones don't get simple functions and button-design concepts right!

High-Tech Rubik's Cube Brings Us Back to the '80s

Remember the Rubik's Cube from the '80s? That multi-coloured, checkered cube that could provide countless hours of fun that quickly turned into determined frustration? Well, a company called Techno Source has now developed a high-tech version of the cube, and I just couldn't resist reporting on it.

Called the Rubik's Revolution, the toy employs the same general design as its predecessor, except that each row does not physically turn so the game-player can match the coloured squares. Instead, the cube has six electronic puzzle games built-in, accompanied by sound, light, and voice effects.

Light Speed requires that you turn off the illuminated lights on each, tiny square as quickly as possible; while Pattern Panic asks that you memorize a growing sequence of patterns, then repeat them by pressing the squares with your finger. Da Vinci Code fans will appreciate Code Cracker (self-explanatory); while players can light up each full side as quickly as they can to compete in Rapid Recharge. Cube Catcher takes things one step further with a race against the clock to find squares that are lit up. A multi-player game is also available, whereby players can pass the toy like a hot potato and challenge one another to defeat the mighty cube.

"It is about speed. It is about smarts. It is a challenge worthy of the Rubik's name," said Executive Vice President Eric Levin.

You'll be pleased to know that Professor Rubik has approved of the new design, which is available in both English and French for $20. A sample game can be found at http://www.rptoys.ca/ (The Canadian distributor for the product).

For those who were never able to conquer the original Rubik's without resorting to cheating by peeling off and switching around the coloured stickers on each square, this technology-inspired version might just bring back some self-confidence in your puzzle-solving skills!

Don't Mess With the Cuban

I reported last week that HDNet Chairman and President Mark Cuban filed suit against DIRECTV because the U.S. satellite TV provider wants to move the company's two HD channels to a new, HD package that would cost customers an additional $4.99/mth. Today, SkyREPORT says that Cuban has succeeded in a temporary restraining order that would prevent DIRECTV from moving the HDNet channels. The actual hearing will take place on December 7, but it looks like Cuban is a force to be reckoned with!

Cuban claims that HDNet would suffer "irreparable harm" if it lost customers due to the extra fee that DIRECTV wants to invoke for its channels. The Dallas judge agreed with Cuban that this was a likely scenario, thus granting the temporary injunction. How many of HDNet's faithful fans would be willing to pay an additional $60/year to access the channels, which include live sports, licensed programming, movies, and original content, all broadcast in 1080i high-definition? Currently, HDNet's two HD channels are part of DIRECTV's basic $9.99/mth. HD offering.

Although DIRECTV is currently not permitted to move the HDNet channels, the company is still moving forward with promoting its new HD Extra Pack package, which will include MGM HD, Smithsonian HD, and MHD. (The Extra Pack was to be offered as a free "preview" until December 15 anyway). No word yet on whether DIRECTV will move two alternate HD channels to the new package should the court rule that HDNet has to stay where it is.

I do agree with Cuban's decision to fight for his content and customers. But I still believe that what's more important than disputing price packages is to get lagging customers on board with HD, period. Isn't it a bit soon in the high-def game to be charging customers more for services?

Speaking of Lemons...

The 'net is rife with stories about the current state of the Canadian/U.S. dollar, cross-border shopping, and why Canadians should continue to shop in Canada (or, as some opine, should head to the U.S. for "better deals"). One area where many have claimed that it's much cheaper to shop in the U.S. is the used vehicle market. However, Canadians should practice caution when looking for across-the-border deals. CBC News is reporting that tons of used cars that qualify for the "lemon" designation are crossing the border into Canada, and into unsuspecting buyer's driveways. Many are via auction, with no proper history being provided to the unsuspecting buyers, who then sell them at a profit in Canada.

Reportedly, a total of 852 cars have brought forth a sour taste in the country between May 1, 2006 and November 5, 2007. More shocking, however, is that 13% of them (110, to be exact) arrived since the Canadian dollar reached parity with that of the U.S. (which, to my knowledge, was less than a month ago!)

Moral of the story: if you get excited about an amazing deal on a used car in the States, don't automatically assume that things are what they seem. Run the proper tests to ensure that it's not a lemon (http://www.carfax.com/) before you, or your customer, gets taken for a ride (or rather doesn't). Or better yet, buy your cars here, in our home and native land! (Of course, it goes without saying that you should run the appropriate back-checks either way).

As the saying goes, give us lemons, and we'll....wait a second, take them back! We don't want any of your lemonade, thank you very much.

Trouble in Lu-Lu Land: Why False Advertising is Bad

Workout-apparel company Lululemon is in hot water because of an issue I like to refer to as "the seaweed scam". The retailer, which has achieved a cult-like status with its athletic customers, has been claiming that its VitaSea line of clothing contains seaweed, and releases amino acids, minerals, and vitamins when the wearer sweats. The product labels also go on to read that they "reduce stress" and provide "anti-inflammatory, antibacterial, hydrating, and detoxifying benefits." Of course all of these fancy-schmancy benefits result in an inflated price. But recently, a New York Times reporter ran his own tests on the material, and discovered that there is, in fact no seaweed in the fabric. "There was no significant difference in mineral levels between the VitaSea fabric and cotton T-shirts," the report read. Uh-oh.

Lesson #1: false advertising is never a good thing, and people will always eventually find out. As in the case of Lululemon, your loyal customers might also begin questioning your company's ethics overall. Lululemon also claims to use materials like soybeans and bamboo in its clothing, but after the NYT report, I wouldn't be surprised if this was outed to be a sham as well.

In the company's defense, Lululemon founder and Chairman Chip Wilson claims that the company simply trusted its supplier claims. No internal testing was actually conducted other than simply putting the garment on. Since it doesn't "feel" like cotton, Wilson logically deduced that it, in fact, must be seaweed. Right...

Lesson #2: don't place blame elsewhere, and always, always, always test products that you put your brand name on. It's your company name on the product. As Benny Hill so profoundly advised: "never assume, or you'll make an ass out of you and me."

Although I haven't actually bought into the over-priced Lululemon craze, I don't doubt that the clothing indeed feels nicer than cotton, and is probably very comfortable. However, claiming that it's something it's not simply isn't right, whether by intention or lack of knowledge. A similar analogy in the technology arena would be a speaker manufacturer claiming that the sound waves emitting from the latest floorstanding model will help improve hearing or let you hear frequencies only dogs previously could; or an LCD monitor company saying that an anti-reflective technology will reduce migraines and cure colds. These claims are equally bad whether they're based on outright fabrications, or the fact that the company believed some doctor from a third-party company simply because he "said so".

What's worse for the company is that it just filed for IPO in July, so the seaweed cafuffle could negatively impact stocks. At last check, Lululemon stock was trading at $42.74, down from $60 in October. There might just be big trouble in lu-lu-land.

Aside from the allegedly false material claims, and the admittance that products aren't tested by the company itself, my main concern is actually for the customers who bought into the whole seaweed, anti-stress marketing ploy. If you purchase an item of clothing because it feels good, is comfortable to wear, or downright fashionable, that's perfectly fine. But if you think a pair of sweatpants will hydrate and detoxify you, get your head out of those pants and grab a glass of aqua!

Gift Cards Could Help Consumers Remain in Canada to Shop

Amidst all of the hoopla surrounding the rising Canadian dollar and the risk of more and more Canadians heading over the border to shop, we see a positive sign: gift cards! An Ipsos Reid poll found that 88% of Canadians enjoy getting gift cards, while 72% say they'd even rather receive a gift card than an actual gift!

This will, of course, bode well for the Canadian retail landscape because, for the most part, one is likely to purchase a gift card from a local retailer rather than one in another country. Sure, online shopping still poses a threat in the gift card domain. But, for the most part, I think Canadian retailers can rest easy that they'll be seeing consumer bucks for those handy pieces of plastic.

Although...I am a bit skeptical about the study results: the press release did not mention the sample size of the survey (it was conducted on behalf of Mark's Work Wearhouse), and the number does appear a bit high. This is especially odd, since a similar Accenture survey conducted at this time last year with 498 Canadians found that only 29% would prefer a gift card to a well thought-out gift. This means that, in one short year, 40% more people have decided they'd rather just get gift cards than a gift? I guess a lot of coal was distributed under trees and in stockings last year! We do have to bear in mind, however, that the studies were conducted from two different companies, so the parameters were likely very different. Nonetheless, it does seem like an oddly large jump.

This year's Ipsos study revealed that women appreciate gift cards more so than men (so much for the theory that "it's the thought that counts"), as did younger folks. As a funny aside, Ipsos says that 46% of men admitted to having forgotten to purchase a greeting card to hold the gift card (39% of women suffered from this temporary lapse). A total of 84% of respondents said that they always remember to redeem a gift card.

As for Canadian retailers, those who offer gift cards options will likely receive some extra bucks this year. My advice to any retailer who doesn't offer gift cards is to jump on that bandwagon ASAP; if not for good, at least for the holiday season. If Tim Horton's can do it, so can you. And for those with expiration dates, what's with that? If someone paid for credit at your store, they should be entitled to redeem it when they see fit.

Buy a Hard Drive, Get a Virus Free

How would you feel if you purchased a hard drive only to find out that it was infected with a virus? This is exactly what happened to some unsuspecting customers of Seagate's Maxtor Basics 3200 500 GB hard drive model. Some of the units reportedly shipped with a Trojan horse virus that would either search for online gaming passwords and send them to a server in China (according to Seagate), or report all data from the hard drive in question back to a pair of Websites hosted in Beijing (according to some other Website reports I've read).

The issue gets even uglier: some sources blame a sub-contractor in China for the error, while others suspiciously point the finger at the Chinese government, calling it a spy attack. Weird.

Reportedly only 1,800 of the drives reached the sales channel, 1,500 of which were pulled in time. Seagate is offering customers who purchased the infected product with a 60-day trial of Kaspersky Lab's anti-virus software, which is said to be able to remove the virus.

Basic math would tell me that only 300 devices were sold with the virus. If you ask me, these guys should get a bit more than a 60-day free trial of some anti-virus software! Sure, it'll cost Seagate to rectify things, but for such a small number of consumers, wouldn't a replacement drive also be warranted in this situation?

What's more, I searched and searched, and could not find the Kaspersky Lab's software anywhere on the Seagate Website, nor a notice alerting customers about the potential risk. (I eventually located it, but only via a PC World report that linked to the direct page). Regardless of whether 300, or 3,000 consumers were affected, this sort of information should always be fully and clearly disclosed to the consumer, rather than hidden in the background somewhere on the Website.

For the customer's sakes, I hope all 300 people were able to fully clean up the drives and get what they paid for.

Are Smartphones Replacing Laptops for Business Professionals?

Are the most advanced smartphones replacing laptops? Five years ago, this question would have sounded ludicrous. Of course note! Your smartphone is for quickly checking e-mails, reviewing documents, and, of course, keeping in touch by voice communication. But today, there are so many sophisticated smartphones on the market with easy-to-use QWERTY keyboards, full document support, and "push", real-time e-mail technology, that a traveling businessperson might feel completely comfortable with leaving his laptop at home.

In-Stat backs up this thought with some juicy statistics: the unit volume of smartphones has exceeded sales of laptops worldwide; and smartphones will grow at more than 30% annually for the next five years. Of course, this could be due to the fact that a smartphone purchase is (usually) much cheaper than a laptop one, and the life span of a smartphone is likely much shorter than that of a laptop PC. (This isn't because they aren't reliable, but I think people tend to upgrade a mobile phone every two years or so; and arguably even more often with the younger generation). Plus, many traditional mobile phone users are likely shifting over to the "smart" phone arena, as models are becoming increasingly consumer-friendly, and more attractive data plans are being introduced.

With thousands and thousands of data applications available for smartphones of every ilk, a businessperson can pretty much perform any task on a smartphone that he might have previously required a full-blown PC to do. Albeit, not as comfortably (especially if he's got massive man hands!) but certainly easily enough to accomplish when necessary. If this is the case, why lug your laptop with you on a business trip when you can just slip a Blackberry or Palm Treo in your pocket and be on your way?

Of course with laptops themselves getting smaller, lighter, and tougher, is it really that inconvenient to use them on the go? I tried out Panasonic's CF-W5 Toughbook last year, and slipping it into my luggage was like bringing along a book - it was unbelievably tiny and lightweight! However, as is standard procedure when taking a flight, you will always have to endure the small inconvenience of having to take out the computer and place it in one of those filthy security trays. Plus, no matter how small a full-fledged laptop PC might get, you still won't be able to shove one into your back pocket!

Nevertheless, In-Stat predicts that much of the growth in the smartphone market will be attributed to their use as a replacement for the traditional laptop. My opinion: although smartphones make great business tools, especially while you're on the go, they still don't compare to the experience and comfort you'd get using a full-blown laptop. That said, they have come a tremendously long way over the past few years; and many are fully equipped to accomodate all your business needs while a laptop isn't in sight.

[To read a review of four of the latest smartphones, flip to Pg. 88 in vol. 6 no. 3 of here's how! magazine (*Note: clicking the link will open up a 7.45 MB PDF file)].

For more information on smartphones and the increasing growth and importance of data, stay tuned to the November issue of Marketnews Magazine.

Wired Mag PR Frustrations: My Rebuttal

A blog entry that Wired Magazine Editor-in-Chief Chris Anderson posted on October 29 was brought to my attention today. He was ranting about "lazy" PR reps that send him floods of mass e-mails rather than researching for which writer each pitch would work best and sending it directly to them. What made his post grab so much media attention, however, was the fact that he proceeded to copy each and every PR rep's e-mail address that had sent him a "spam" message in the past month to his blog for all to see! Hundreds of them! After hearing about this, I felt compelled to respond with my own rant.

First, I sympathize with PR reps who might not know each and every writer by name, specialty, or face. It takes time to build a relationship and understand someone's interests. But sometimes, it does take a few "blind" e-mails to get to that point. There's a reason big journalist databases exist: because to research each and every writer of each and every magazine is an arduous, not to mention time-consuming, task. Sure, that is part of their job, and I'm not defending allegedly "lazy" tactics. But just because Bob Smith hasn't written an article on PCs in the past year doesn't mean he doesn't specialize in that area. Should a PR rep then just assume that PC-related pitches don't apply to him? Or are they required to research someone's entire career? Or perhaps call them up to chat about their interests? Frankly, I'd be pissed if my phone kept ringing with PR people asking about my areas of interest, and what information they should send to me. Just send it, God damnit, and I'll tell you if I don't want it! Or, even better: once we do finally meet in person, discuss things then, so we can create a lasting and mutually beneficial relationship.

I also don't want them to "research" what I've written about, then decide what pitches apply to me and which ones don't. In fact, this has happened in the past, resulting in our company missing a major product launch because the PR company didn't think the event was "our beat". My response? "Let US decide that, not you."

I receive e-mails all the time from resource databases asking for updated contact information and what areas of consumer electronics interest me. I know this information is sent to PR agencies who can then discern what pitches they should send. That's fine. It's ludicrous to expect a PR rep to decide which pitches should go to whom without first developing a relationship that doesn’t begin by being annoying and overly-persistent. A simple e-mail to say "hey, this is who I am and I'm here if you're interested" is fine with me.

I am not sure if Mr. Anderson is so angry because the reps kept sending information after he asked them not to (he didn’t say this is what happened), or if it's just because the information was sent directly to him instead of one of the writers being the first point of contact. He says in the first paragraph: I am an actual person, not a team assigned to read press releases and distribute them to the right editors and writers. Ouch. True enough: but you are a journalist that should be staying on top of all areas of the business. If you'd rather a message be sent directly to someone else, why not just tell the rep that, and case closed? If they don't oblige going forward, then I'd be pretty annoyed, too! But frankly, if I were a PR rep, I'd be copying the editor-in-chief directly as well!

When it comes to his points about personally addressed notes, I do agree that these are much more PR-appropriate, and will certainly resonate better with the journalist than a form "to whom it may concern" e-mail sent to half of Canada's media personnel. But they aren’t always possible. I'd love to send a newsletter each week that's tailored to the specific interests of each and every one of our readers. After all, it is our job to produce content that's applicable to our audience, right? But I simply don't have the time, so in one blast, everyone gets the same newsletter, and can pick and choose which items they want to read, and which to discard. They don't take it personally. And neither do I.

When it comes down to it, PR reps are the people that are there to help YOU, so it shouldn't be so hard to do the same in return. I'd be surprised if there wasn't a time when, in a hurry and on deadline, every journalist has contacted the first PR rep from a firm that came to mind instead of looking through notes to find out who specifically was actually on the account. I doubt the person's response was: "screw off, a-hole. Don't you know which one of us you're supposed to call?"

I do empathize with Mr. Anderson. I, too, get hundreds of press releases and pitches daily; and some, yes, I will chuck straight to the deleted items because it's not personal, I don't know the sender, or it simply isn't relevant. Sometimes, however, I'll find something of interest, contact that person, and a relationship that's valuable on both ends unravels. Sometimes, I'll hit the "forward" button, and send it to a writer who specializes in that area.

Call them flacks or call us hacks, we're all working together toward the same goal: to inform readers of the latest and greatest that's out there. If the PR person doesn't bother building a relationship after he knows more about you, that's another story. If he doesn't personally call to invite you to an event, or send a note to you, and just you, at that point, he isn't doing his job. But when it comes to those with whom we haven't yet crossed paths, we can't expect to be singled out in a sea of hundreds and hundreds of magazines, TV shows, Websites, and newspapers. Bottom line: cut the flacks some slack.

That said, I will not be linking to Mr. Anderson's blog entry from this post. As for me, rest assured that I will never post an industry member’s e-mail address in anger or frustration. Now, if I get one more e-mail about VIAGRA or $10,000,000 in a Nigerian bank, that's another story...

Music World to Succumb to Digital Downloading

Sadly, Music World is the latest music retailer to succumb to the growing popularity in digital music downloading. According to a report from the Globe & Mail, the company has filed for bankruptcy. Earlier this year, Sam The Record Man closed the doors to its iconic downtown Toronto Yonge St. location, leaving many a nostalgic baby boomer teary-eyed.

Although it's sad to see the effects that digital downloading is having on traditional music retailers, there's also a positive side to this story. Remember, it isn't that consumers are no longer purchasing music; it's that they're purchasing it in a whole new way. Through digital download Websites like iTunes and Puretracks. Through mobile carrier services that let you download a song straight to your mobile phone. Through custom-made CDs that are played back on a home theatre system and streamed throughout the home. Through satellite radio. Through streaming Internet radio. Through portable devices like the Sonos music system. The list goes on and on, and the opportunities at both retail and the manufacturing level are endless. We're not losing interest in music: it's just the platform for which we access and purchase it that's changing.

It is unfortunate that retailers like Music World and Sam The Record Man are feeling the brunt of this change. But there are others who manage to persevere through the storm, mainly by not focusing solely on music. Like HMV, which has managed to remain strong by expanding its offerings to include things like video games and consoles, and a massive selection of movies at varying (and often attractive) price packages. In August of this year, the retailer dropped the price of some CDs by as much as 33%!

Others have made bold moves to keep music sales up: Wal-Mart, for example, offers CDs like the new number-one Eagles album Long Road Out of Eden, at price parity with the U.S. Even non-traditional music outlets, like Starbucks, are managing to remain in the music game. Coffee house Starbucks has built digital music download stations in some U.S. stores where customers can listen to tracks, and create and purchase a custom CD while they're sipping a latte.

There is a way to stay alive in traditional music retailing: it just takes some really creative thinking outside of the box, and an entirely new business plan.

Music World stores are said to close by early next year. As of today, the company's Website simply brings up a Music World logo, but no content. It's a shame, because I did find the store a great destination for tough-to-find DVDs.

In the words of popular rock band Queen, another one bites the dust...

Marc Cuban Has it Out with DIRECTV

HDNet.com Chairman and President Marc Cuban isn't just busy dancing with the stars. He's also duking it out with DIRECTV over how much the satellite providers' customers should pay for the HDNet channels. Currently, Cuban's two HD channels are included in DIRECTV's "basic" $9.99/month HD subscription package, but DIRECTV wants to move them to the higher-tier HD "extra" package that would cost another $4.99 per month. According to SkyREPORT, HDNet has filed suit, claiming that DIRECTV is "trying to destroy it" by forcing customers to pay more for the HDNet channels.

It sounds a bit childish (not to mention superhero-ish) to claim that a company is "trying to destroy you", but I can see HDNet's point in that customers might be reluctant to now pay for a service that they were already recieving. On the other hand, being classified as having premium offerings says a lot for the content you offer, right? If HDNet fans truly are fans, they'll pay the extra $5/mth which, in addition to HDNet and HDNet Movies, will also include MGM HD, Smithsonian HD, and MHD.

This leads to an even bigger issue: should HD content be classified into different packages, or should all high-definition channels be offered to subscribers for one fee? Of course you don't want to pay a premium for channels you are never going to watch, but why should one person's interests cost more money than another's? Canadian HD providers have adopted the same tiered approach to HD content, with things like special sports channel add-ons, or additional high-definition movie channels. The bottom line is that if you want it, you'll pay for it.

Back to the issue in the U.S.: HDNet feels that DIRECTV's decision represents a "gross violation of contractual obligation"; while DIRECTV deems the lawsuit unnecessary, with no evidence to support it. Let the drama ensue...

On a related note, Leichtman Research Group reports that only 32% of consumers actually know there's a difference between HDTV and digital TV, and that, of almost 28 million U.S. households with HDTVs, only half actually subscribe to HD service. That being said, I don't think the issue should be about splitting up content: it should be about promoting the very existence of HD content so that the other 50% of consumers can get on board!

Beware of Black Friday!

As retailers south of the border gear up for what's traditionally known as "Black Friday" (i.e. one of the busiest and most heavily promoted shopping days of the year), we're all wondering how things will fare. Will customers hoard into stores trying to get the best deals? Most definitely. Will retailers drop prices to record-breaking lows? Very possibly. Will chaos ensue? Time will tell.

Black Friday relates to the date in which retailers historically made the transition from unprofitability (the "red" zone) to profitability (the "black" zone). Since it falls on the day after U.S. Thanksgiving, which is always the fourth Thursday in November, the name Black Friday was born.

In 2006, this day led to record low prices and high shipments in the flat-panel TV arena. With sleeker, more technologically-advanced and already low-priced TVs on the market already, what will Black Friday mean for those playing in the LCD/plasma arena? As retailers fight for a larger piece of the shopper's money pie, how low will prices get, and how ridiculously great will promotional offers become? Judging from a move that Wal-Mart has already made, things could become mouth-droppingly exciting: according to DisplaySearch, the mammoth retailer is already offering a 50" HD plasma TV for less than $1,000 (the same TV sold for about $1,700 just last month). If this is a pre-Black Friday promotion, how cheap will the set be come end of the month??

DisplaySearch reports that Black Friday 2006 accounted for almost 20% of all TV units sold and 17% of revenues for the entire fourth quarter: yes, just that one day! Last year, Panasonic's 42" TH42PX75U was the best-selling model based on revenue, which was sold through Best Buy outlets at an impressive price of $999.

"Black Friday has always been a crucial event for retailers, but because of the surge in demand for flat-panel TVs, it has become an important indicator for selling trends for the rest of the holiday season," explained Paul Gagnon, Director of North America TV Market Research for DisplaySearch. "Brands, retailers, and many others can gain critical insights and develop tactical plans from these early Black Friday results."

With the Canadian dollar so high (and getting higher - it's almost $1.08 today!), Canada/U.S. borders could be more flooded than usual the week of Black Friday. Overly brave Canadians might just attempt being trampled by U.S. shoppers in an effort to cash in on the overwhelming deals.

Digital Radio Set for Major Growth

Despite what some nay-sayers might believe, digital radio is set for major growth, with satellite radio leading the pack in the U.S. According to a study conducted by market research firm In-Stat, sales in the digital radio market are expected to rise three-fold from 2006 to 2011, reaching almost 32 million units four years from now.

It's interesting that satellite radio technology is still numero-uno south of the border, especially given the growing consumer awareness of HD Radio, which permits participating stations to simulcast in digital format. Further, HD Radio is actually free, whereas satellite radio requires that you pay for a subscription to access it!

The In-Stat study reports that 'increased choice of programming" is the primary driver of digital radio. In my opinion, the absence of commercials is just as significant a driver. Sure, it's important to be able to hear the local news, commentary, and traffic updates; but on the other hand, if I have a 20-minute commute to the office, I don't want to spend half that time listening to commercials in between tunes and the DJ's witty repertoire. Heck, on some days, I don't even want to hear the DJ, which is where a station with constant song after song after song is a welcome option.

Of course, there are customers with whom the music offerings on satellite radio simply don't appeal (major classical music aficionados, come to mind as an example). But for others, a few weeks with satellite radio will have you hooked; and the nominal, yearly fee likely won't phase you.

The results of the In-Stat report are even more topical, given the possible merger that's surrounding the two satellite radio providers, Sirius and XM. Personally, I think competition is a good thing, and with one, powerhouse provider, we might see less appealing deals and offerings. Let's hope this isn't the case. And even if a merger happens, it will take plenty of time to smooth out details; and since the Canadian counterparts operate independently from the U.S., the changeover may take even longer to happen here.

YouTube Gets Canadian-ized

Popular video content distribution Website YouTube (now owned by Web behemoth Google) launched a Canadian portal today at http://www.youtube.ca/. My first question is: why might we need a country-specific site when good ol' youtube.com has all of the content anyone's little heart could ever desire? The answer, according to the folks at YouTube, is easy: content specifically tailored to the Canadian culture.

Many might ask what specifically constitutes "Canadian culture?" Using the word "eh" after every question or statement? Drinking beer? Toques and mittens eight months out of the year? What sort of content could possibly be isolated for a Canadian-specific Website? The folks at YouTube gave a few examples at a special press briefing this morning. The first is the obvious: videos created by Canadian members. The second, and likely biggest announcement for the company, is video produced by Canadian content partners, which currently include News Canada, CBC, Dose.ca, Corner Gas, and CFL, among others. These partners view YouTube as a means to expose their offerings, thus helping to build the brand's credibility, and eventually leading Web-surfers back to their own sites. "With traditional media," explained News Canada's Ruth Douglas, "it's difficult to get feedback and find out what people really think of you. Things like user comments help us to improve our product."

Of course the promotion of Canadian content as a whole has been an ongoing theme with things like TV, satellite, and standard radio broadcast requirements. Popular YouTube member Casey McKinnon pointed out that this move on YouTube's part is, in a way, a jump ahead, because it "promotes Canadian content without forced government regulation." If you can beat 'em to the punch, why not? Once the CRTC gets a hold of the world wide web, who knows what will happen to the access of globally popular sites like YouTube.

I view YouTube.ca as an "advanced search"-esque extension to the main YouTube.com Website. If I search "school shooting" because I'm looking for some video commentary on an unfortunate event that just happened in my city/province, it would certainly be easier to weed through the results knowing that I just eliminated results from every country but Canada. After all, the company's International Manager Sakina Arsiwala pointed out that an overwhelming seven hours worth of video is uploaded to the global site every minute! That's a lot of weeding!

YouTube's International Product Manager Luis Garcia gave another humorous, but Canadian-specific, example: if someone from any other country searches for "beaver tail", they're likely looking for videos about that cute and furry animal. If a homegrown Canuck conducted such a search, he might just be looking to learn how to make our popular, cultural dessert!

Canadians need not worry about automatically being redirected to YouTube.ca if you type in YouTube.com (don't you hate when Websites do that?) YouTube.ca is accessed at your choice via an ad that appears at the top of the homepage; or by selecting the tiny globe that appears at the very top, right hand corner (doing so will actually give you a drop-down menu of all YouTube country-specific sites, of which there are currently 15.

Personally, I'll be sticking to YouTube.com for all of my video interests. But if I ever want to know more about beaver tails, the CN tower, or Celine Dion, I'll go straight to the local source!

[Photo: Popular Canadian YouTube.com personalities were on hand at the YouTube.ca launch event to talk about their experiences creating videos for YouTube. From l-r: Tony Huynh, a.k.a. TheWineKone; Oshawa, ON teen Mememolly; Montreal, QC native Casey McKinnon, a.k.a. Galacticast; and two members from the eight-person, Halifax, NS-based sketch comedy group, Picnicface.]

First Hollywood Writer's Strike in 20 Yrs Fueled by DVD & Internet Distribution

For the first time in two decades, The Writer’s Guild of America is on strike, due largely in part to the growing popularity of DVD and online content distribution. Writers feel like they’re getting the short end of the, er, pen, when it comes to royalties from the sale of DVDs, as well as revenue generated via TV shows and movies distributed in digital format over the web.

The Internet has been causing a lot of stir in all areas of content distribution, given that it’s a relatively new and significant medium that really hasn’t been regulated by any unified standards. The music industry has been the most outspoken about being compensated for everything from digital music downloads, to wanting a piece of the pie from the sale of digital music players that have built-in hard drives. Now, it appears to be the video side's turn.

It makes sense: video is now becoming the "hot" medium, especially online. Who down the line of creation of content isn't get what they deserve? Judging from the picket lines in NYC, and the several TV shows that could be forced to run reruns should they continue, writer's feel they're tops on that list.

The Associated Press quoted a Late Night with Conan O'Brien writer as stating: "They claim that the new media is still too new to structure a model for compensation. We say give us a percentage so if they make money, we make money."

Until the issue is resolved, your primetime sitcomes will probably be safe, since many episodes are written and filmed in advance. However, live shows (like late night and daytime talk shows) might be shaking in their boots right about now. Saturday Night Live will probably look more like Saturday Night in syndication!

As various types of content flood more and more to the web, the industry will be forced to come up with some sort of standard for compensation. This might have been relatively easy with physical formats like DVDs, CDs, and cable boxes, but with a worldwide, easily accessible and updateable medium like the Internet, things could get very messy.

First-Ever Brand Repair Rates for Flat-Panel TVs

Since flat-panel TVs have been a relatively new product category, we haven't had any historical data to indicate what repair rates might be...until now. Consumer Reports has just issued what it deems the first-ever brand repair rates for flat-panels and rear-projection TVs, based on approx. 93,000 sets purchased between 2004 and 2007. The outlook? It's good!

Although many manufacturers might be banking on one technology coming out superior to the other, this isn't the case: there was no difference in reliability between LCD and plasma TVs, both of which had a very small 3% repair rate. Kudos to Panasonic, which took top ranks with just a 2% repair rate in both LCD and plasma categories.

Other highly-reliable LCD brands included Sony, Sharp, Samsung, Toshiba, and JVC; and in plasma, a gold star also goes to Pioneer and Samsung. Although they haven't been on the market for a full three years to qualify for the longevity tests, Consumer Reports says that the reliability of the latest Olevia and Sanyo LCDs, and Hitachi plasmas, looks "promising".

Rear-projection TVs, on the other hand, didn't rank so well. These sets required much more frequent repairs than LCD or plasma sets, with a repair rate of 18% that was mainly due to bulb replacements. Sony and Panasonic had the least repairs in this category with their rear-projo LCDs, followed by Samsung's DLP TVs.

As both LCD and plasma technologies continue to improve, we can only predict even better repair rates in both categories. Congratulations to all of the flat-panel TV manufacturers that came out on top. These reliability rates are just another notch in the belt to convince lagging consumers to switch over to flat-panel TV.

[Photo: Panasonic Canada's Barry Murray at the company's product showcase last year. Panasonic came out on top in terms of repair rates for flat-panel TVs, with the lowest percentage of repairs in both LCD and plasma categories.]