Friday, December 31, 2004
I quit Netflix today (again!)
For the second time this year I quit Netflix. This time it is because baby number 2 is almost here and I will not have time to enjoy it. I had the $12.99/month option (allowing up to 4 rentals per month, 2 at a time). Netflix service has been great. One of their many regional warehouses is only a few miles from my house.
Like last time, when I quit using their online form (did you know it is a law that if you obtain a subscription service through a webapp you have to be able to cancel it through a webapp?) I was offerred a "bargain" rate at the last possible moment. They offerred me the $12.99 deal for $9.99 for six months. They did the same when I cancelled in September. Makes you wonder why everyone doesn't just rejoin and quit all the time.
Prediction: Netflix will be crushed by Blockbuster, then Blockbuster will make us miserable. They will sell a competing service below cost to steal customers, then raise the price once Netflix is belly up. I have seen this pattern with Waste Management for my trash pickup already. Monopolies are quite affective.
Like last time, when I quit using their online form (did you know it is a law that if you obtain a subscription service through a webapp you have to be able to cancel it through a webapp?) I was offerred a "bargain" rate at the last possible moment. They offerred me the $12.99 deal for $9.99 for six months. They did the same when I cancelled in September. Makes you wonder why everyone doesn't just rejoin and quit all the time.
Prediction: Netflix will be crushed by Blockbuster, then Blockbuster will make us miserable. They will sell a competing service below cost to steal customers, then raise the price once Netflix is belly up. I have seen this pattern with Waste Management for my trash pickup already. Monopolies are quite affective.
Don't Bet on a $499 Bargain Mac
Rumor has it Apple will announce a cheap sub $500 computer with no display. Don't bet on it. Here's why:
Reason 1. No evidence.
I have been watching Apple rumor sites for years. Some rumors come true, others are conveniently forgotten (iPhone anyone?). When it comes to hardware rumors there is one common thread: a Taiwan (or other Asian country) computer trade publication will make a cryptic report about a supplier providing Apple with "flash memory", or "17 inch LCD" panels, etc. For example, in November it was rumored that Apple will create a flash memory based iPod. A few weeks later a Taiwan trade magazine reports that Toshiba is making memory chips for Apple. Count on that rumor to be true. Other examples would be Toshiba regularly releasing press releases about new record breaking capacity 1.8 inch hard drives. I have watched press releases and stories for 10GB, then 20GB, 30Gb, 40GB, 60GB, and now 80GB -- all followed 4-8 months later by a new iPod.
Reason 2. No significant market exists for it
I see two markets for a bargain Mac:
(1) Twenty something guys who go to Best Buy every Wednesday and buy all the new DVD releases and XBox games without batting an eye, and
(2) People who, like my friend Eric's mom who want a PC for a fair price that will either (a) allow them to run some office utility apps they got from a friend at church, or (b) allow their 14 year old kid to "share" music with friends.
Group (1) might actually buy the machine. They will probably like it, but not take it too seriously. Their numbers would be too small.
Group (2) is more interesting. They are obsessed with not looking foolish at the water cooler: "you paid $500 for a computer! I got my eMachines for $250. It runs all the games and my Tommy has 14000 songs on it!". They also know that their machine has to be serviceable (for free) by nerd-in-laws or church "buddies". They would be terrified of buying a computer that they couldn't get fixed (i.e. virus/spyware cleaning) for free. This group also includes a lot of geeks. They like the idea that you can open the box and slam in a $60 Caviar drive any time you want. Can't do that on a Mac.
Reason 3. Margins. Apple has high profit margins on all their products. This is why "they just work". Research and design lead to innovation which leads to cool products. Apple "innovated" its way through the recent recession. They learned a lot.
A tiny market for a product with no profit margin? Don't hold your breath. This rumor is not going to come true. On the other hand, look for an "expensive" flash memory baby iPod. It will cost $30 more than anything else on the market and delight everyone who buys it.
Reason 1. No evidence.
I have been watching Apple rumor sites for years. Some rumors come true, others are conveniently forgotten (iPhone anyone?). When it comes to hardware rumors there is one common thread: a Taiwan (or other Asian country) computer trade publication will make a cryptic report about a supplier providing Apple with "flash memory", or "17 inch LCD" panels, etc. For example, in November it was rumored that Apple will create a flash memory based iPod. A few weeks later a Taiwan trade magazine reports that Toshiba is making memory chips for Apple. Count on that rumor to be true. Other examples would be Toshiba regularly releasing press releases about new record breaking capacity 1.8 inch hard drives. I have watched press releases and stories for 10GB, then 20GB, 30Gb, 40GB, 60GB, and now 80GB -- all followed 4-8 months later by a new iPod.
Reason 2. No significant market exists for it
I see two markets for a bargain Mac:
(1) Twenty something guys who go to Best Buy every Wednesday and buy all the new DVD releases and XBox games without batting an eye, and
(2) People who, like my friend Eric's mom who want a PC for a fair price that will either (a) allow them to run some office utility apps they got from a friend at church, or (b) allow their 14 year old kid to "share" music with friends.
Group (1) might actually buy the machine. They will probably like it, but not take it too seriously. Their numbers would be too small.
Group (2) is more interesting. They are obsessed with not looking foolish at the water cooler: "you paid $500 for a computer! I got my eMachines for $250. It runs all the games and my Tommy has 14000 songs on it!". They also know that their machine has to be serviceable (for free) by nerd-in-laws or church "buddies". They would be terrified of buying a computer that they couldn't get fixed (i.e. virus/spyware cleaning) for free. This group also includes a lot of geeks. They like the idea that you can open the box and slam in a $60 Caviar drive any time you want. Can't do that on a Mac.
Reason 3. Margins. Apple has high profit margins on all their products. This is why "they just work". Research and design lead to innovation which leads to cool products. Apple "innovated" its way through the recent recession. They learned a lot.
A tiny market for a product with no profit margin? Don't hold your breath. This rumor is not going to come true. On the other hand, look for an "expensive" flash memory baby iPod. It will cost $30 more than anything else on the market and delight everyone who buys it.
