Below The Crowd

The Customer is Sometimes Wrong

Somebody is finally taking my advice.

About eight years ago I was working for a major PC manufacturer, doing analysis on customer support patterns and costs. The results I came up with were not surprising. 80% of our support costs were due to about 20% of our customers. And worst 1% were almost 30% of the total cost. For the most part, these were not people whose PCs were not working properly. Many of them were people who just did not want to be bothered with learning, who would call in to ask the same questions about basic operations day after day. Some of them felt that our customer service people were there to provide free tutorials for hours each week. A few of them -- like a priest in a remote parish who called us 3-4 times a day -- were clearly just lonely and looking for somebody to talk to.

At the time I had other suggestions too. It was pretty easy to identify that the biggest problem customers tended to have purchased their products from certain retailers, and usually at certain times of the year. So I recommendded, among other thing, that we reconsider doing things like day-after-Thanksgiving specials at Wal-Mart, or at the very least do some further analysis, to attempt to determine if the long-term value of the new customers acquired could ever justify the cost of getting them up to speed on their intitial purchases, and whether in fact they ever would come up to speed and be satisfied with the product.

For those people who were truly at the extreme -- the ones who were five or six standard deviations away from the norm -- my recommendation was simple: Repurchase their PCs and all accessories from them at the original MSRP (probably less than they paid at retail), and even provide them an extra $100 gift card which they could use to buy a competing product. Getting rid of that small number of people would be worth the money.

So yesterday's news about Sprint Wireless did not surprise me in the least.

Brief Notes

Wrath of the RHIGF

I spent my day snaking hairballs out of my shower drain.

The drain has become progressively worse and worse since my Raven Haired Italian Girl Friend (RHITF) stayed here a while back.

I believe I have now completely cleaned out all the long strands of raven-colored hair from the drain, and I can shower without quickly standing in dirty water up to my ankles.

Still, sort of miss having her here, though a recent shorter-haired visitor of Czech origin has made up for the company. Too bad she's returned home too.

Israel Passport Update

Well, I got the document as discussed the other day. But apparently only good for one year. It seems that the US government has been concerned about foreign nationals arriving here, "losing" their passports, and then getting new ones in an effort to avoid anybody noticing that they stayed far longer than their tourist visas permitted. This avoids their being blacklisted for future travel. In most cases passports are not even renewed: the person is usually given a one-way transit document good for only a few months and allowing the holder to go home.

I was allowed to get an actual passport because my old one which was issued in 1973 was "lost" so long ago and because there's no question of my legal status in the US. Still, at the US government's insistence, I can only get a 1 year document after reporting a loss. In six months I can go back and request that it be extended out for an additional nine years, upon proof of being here legally, which I already provided.

Yet another example of our Department of Homeland Security generating lots of rules and "action" with no real results.

Weekend Cat Update

The RHIGF is the source of only one type of problem hair this week. With the recent increase in temps, shedding activity has increased significantly. Time for some serious grooming.

Panorama Photo Update

Got myself this neat little device from Really Right Stuff, who make some of the coolest camera-support equipment available. I've calibrated it and did some experiments, and it's pretty fantastic. Don't have any really worthy images, but look for some soon. My 20mm lens seems to be just about perfect for panoramas on the digital Nikon.

iPhone Mania

My own take on this is that it'll open up the smartphone market for consumers in a way that it has never been open before. That said, as Kevin Wassong notes, it's not a device for my mom, and in truth is overkill for my needs too.

But it's not going to displace the BlackBerries in the business market until things like integration with enterprise email servers are worked out, and possibly not even then. I have not had good results with touch-screen keyboards of any size in the past and am somewhat skeptical of the reviews claiming that it's not an issue. Maybe not for casual consumer web surfing, but has a real crackberry addict tried it and liked it?

The Death of Biotech and Pharma

David Miller of Biotech Stock Research points out in this month's newsletter that it is quite possible that biotech and pharma, along with much of health care, is likely to become uninvestible in the coming years. Copyrighted stuff, so can only give tidbits here. Justifications for this are mostly political: in addition to the liklihood of more regulation and price controls, the FDA has come under so much political pressure to avoid approving drugs with risks, that the liklihood of approval has been signficiantly reduced, the liklihood of approval subject to ongoing re-evaluation much increased, and thus the costs of bringing something to market increased signficantly. At this point a drug that experiences significant side-effects in only 1% of the people who take it is being questioned. That type of scrutiny would have kept lots of current drugs off the market. It is a big deal.

He forecasts that in coming years, we'll see a move away from drugs that work for everybody and towards solutions that integrate genetic testing of the potential patient, with a selection of drugs that are uniquely suited to that patient. From my perspective, the problems with this will continue to be political. What if you come up with a drug that works well only with people whose "genetic identifier" includes the gene for blue eyes or low-skin pigmentation? Think the polticians won't intervene against a "racist" cure, even if grounded in good science?

Summer Travel

It looks like this summer's travel will be mostly related to my mom's upcoming move. While my brother and I are happy to finally see this happen, an August move in Manhattan is not sounding like fun.

Perhaps I'll manage to squeeze in a quick birthday trip to the mountains.

-btc

Advertising

If you've looked at this blog, you'll note that there are now some Google ads embedded in the main page as well as in all of the posts. There are a few reasons for this:

• I've finally hit the point where the traffic justifies trying to monetize this thing.
• Anecdotal evidence suggets that pages with embedded Google ads do much better in Google's rankings than pages without them. I suspect the reason for this has less to do with an overt bias and more to do with the fact that sites with ads get crawled a lot more frequently, but I wouldn't put it past Google or anybody else to favor the folks who drive traffic their way.
• My accountant would really prefer that my business has multiple streams of income, even if they are small. I've never considered this blog a "business," but I suppose I might if there's a few hundred bucks a year in it.

I've rebuilt the pages to keep the ads as unobtrusive as possible. They should blend in pretty well and are located at natural break points or at the ends of blog entries.

I have also updated my search box to use Google for searches both on this site and on the web.

-btc

Out of Control Again

I'll admit it, I'm a pretty big fan of Kevin Kelly's stuff, so looking at things from the "out of control" perspective tends to appeal. Likewise, I tend to be a big fan of Michael Rothschild's "Bionomics" theories. Whether in my regular business (project management) or in the world of companies I invest in, I tend to avoid those situations where management still believes the world is predictable and controllable.

So I liked Cody's latest piece about the Cable and Satellite companies. That I am currently going through "cable hell" probably makes me more receptive than ever, but as much as I sometimes disagree with Cody's optimism about where technology is taking us, I can't disagree with this one.

Many of Us Don't Want Cameraphones. Deal.

I've been chatting with Cody about a debate he's been having over at RealMoney about corporate demand for phones with cameras. He's making the point (that I agree with) that many companies just don't want them. William Gabrielski is saying it's high time that Blackberry finally included a phone.

I've done a bit of research on these things in the past, and while not all my info is 100% current, here's what I've found, and why I have to throw in my hat with Cody's side of the discussion:

Who doesn't want camera phones?

Brief Notes

Some notes, excerpted from an email exchange with Kevin Wassong of Minyanville:

Sun Microsystems:

When I worked at HP (NYSE:HPQ), we always joked that Sun (NasdaqNM:SUNW) had great technology and that if they were still around in a decade, when the world was finally ready for them, they would do really well with it. That was a decade ago. Despite our snarkiness back then, they're still around. And the world is finally on the verge of being ready. (Long position in SUNW. Rockin' today!)

Media:

Nobody should ever expect the world to unfold without many, many fights along the way and some caution is necessary before you plunk down a large chunk of money betting on the future, because there'll be big bumps in the road.. Already, the "pipe" owners are suggesting that they should be able to pick and choose who gets to distribute broadband content. They're trying to maintain the old cable TV model in which their earnings power was derived from two sources: making content companies pay them for the right to be part of the limited channel lineup, and making consumers pay for whatever lineup they came up with. Ultimately they will fail in being the "filter" of what gets to the consumer, because the sources of broadband connectivity will be too varied, including competing wired providers and various wireless schemes. In the meantime, they'll try to make life miserable for anybody other than their own preferred providers, which in some cases are divisions of the same company.

[Note, this was in response to Kevin's comment that in the future, "there is no internet, there are no cable channels. There are digital networks--input, output. That's it."]

Broadband Fees:

On that note, I do expect that the flat-fee residential broadband connection will become a thing of the past. Most likely, it'll evolve towards some type of pay-for-use scheme, not dissimilar to the pricing scheme for my cellphone, which charges me a flat fee for all "in network" connections and additional fees for the use connecting to other providers, and some discounts if that use is outside of peak hours. I don't get worse service when I go out of network, but I do have to pay by the minute or megabyte. And the rates might be cheaper if I time my downloads to off-peak hours. (Expect a version of iTunes that allows you to program your desired download schedule to match your broadband provider's "off peak" hours.)

Media Device and Computer Convergence:

The battle of the output devices has just started. Microsoft's Windows Media Edition is a disaster from a user perspective. This brief exchange is just a small datapoint. (My comments are posted indirectly by a friend in the business, alias "Workman.") Apple will probably do a better job on this, but it'll still most likely be a device for techies that will require customization and personalization like any other PC before it can really work well as a media center. And when you're done with that, it probably won't be an optimal PC.

A lot of thought and redesign will have to take place before these new devices end up as fixtures in the typical living room. My own belief is that the living room device is going to be much more akin to a souped up, internet and video game-enabled TIVO device than to a current day desktop PC. The one thing we found over and over again in my HP days was that people didn't want PC-style complexity and confusion in their living rooms. And really, they didn't want to do spreadsheets on the sofa anyway. Microsoft didn't get this when I worked with them at HP, and I don't think they get it today.

Sun and Google:

The above favors a Sun/Google (NasdaqNM:GOOG) model of simpler "thin" computing devices. Imagine a cross between an XBox and a Tivo, with built-in Internet browser, mail client and simple controls that even my mother could use without calling me twice a week for help. Probably won't be the place for me to to do high-end Photoshop work or build complex financial models, but that's not what it's for and it'll be priced appropriately.

Advertising in Digital Media:

The ability of consumers to block unwanted advertising streams from this new media world is going to be much greater than it ever has been. The various ad-blockers and sitelists I currently use are just the beginning of this. And they're getting easier and easier to use. To the point where even my mom now has one up and running. The advertising business is going to have to completely rethink how they get through to people. Hollywood has been notoriously anti-consumer when it comes to inserting annoying stuff into their content in a manner that makes it unavoidable. (Don't you love those DVDs where you can't skip or fast-forward through the "coming attractions?") The same is true for some websites -- most commonly by spreading even short articles across multiple pages with dozens of ads on each. They're all going to have to get a lot smarter about this. I think this little Israeli company, whose CEO I met recently, is on the right track. The opportunities go well beyond just video games, which is just one form of digital content.

Why Sirius Can't Have My Email Address

I just deleted my email adddress from my account profile at Sirius Radio (NasdaqNM:SIRI).

I've only been a Sirius customer for a week or so. I joined to enjoy the three months of "E Street Radio" celebrating the re-release of Bruce's Born to Run 30 years ago as well as for Howard Stern's arrival on their airwaves in January. During my brief membership, I've averaged one "informational" email every two days or so. More of the subscription spam I've complained about before.

Sirius don't require me to give them an email, so I won't. They'll have to contact me in other ways to let me know my subscription is expiring or whatever. When they agree to respect my wishes not to hear from them by email except about subscription-related issues, or at the very least to limit their emails to infrequent newsletters, then they can have my email again.

A Service Economy with No Service: Verizon Part Deux

My lack of service experience has continued this week, to include my mom, again with Verizon, but this time for her landline service.

My brother and I changed some of her services for her last time we visited. We put her primary line on the Verizon Freedom plan, to get rid of about $80 in "legacy" long distance charges from AT&T every month. We also asked for their International choice plan, which for $3 per month, entitles her to cheaper long distance rates.

Of course, somehow the request to add the international plan got lost and Verizon tried to nail her with $1.68 per minute for a few calls to Israel. Confronted with two witnesses to the conversation -- me and my brother -- they agreed to credit her for the difference to the $.10 per minute "discount rate."

And it's no wonder people are fleeing to Skype, Vonage and all sorts of other alternate providers.

At Vonage, for only $24.99 per month, you get unlimited calls in the US and Canada, and without any need for complicated "international plans" you are given the "regular" rate to Israel of only $.05 per minute. Even after covering the cost of broadband from your cable provider, that's still a whole lot cheaper than Verizon's "Freedom" plan.

When mom moves, there'll be big changes. Verizon most likely won't be part of them, unless they decide to stop acting like a monopoly and provide the same simple, seamless service available through other alternatives.

-btc

A Service Economy with No Service: Verizon Wireless

My dad always used to say that we live in a so-called "service economy," with no service.

Can't think of better evidence of this than my past week.

Verizon, Part One

Friday afternoon my cellphone, along with several other items were stolen from my car. It was parked right in front of my brother's garage for a few minutes while I was unloading things and somebody walked onto the private property, went through it and disappeared.

[As an aside, is it any wonder that states are finding it easier and easier to pass legislation allowing their citizens to shoot anybody who even seems like a threat to life or property?]

Anyway, my Treo 600 -- which I never really liked -- was gone. As I'm not eligible for any kind of new phone until August and the deductible on my insurance is pretty high, I decided to go back to a simpler phone combined with my old Palm.

Cancelling my old phone was pretty easy. It was disconnected and the ESN permanently blacklisted within minutes of my discovering the theft. The guy at Verizon also offered me a simple Kyocera phone for about $90 as a replacement. I told him it would be easier for me to go to a Verizon store in the area and pick it up there, or maybe pay a bit more for a slightly nicer replacement.

I should have known better.

F5 Networks (FFIV)

Bottom Line: Great technology, increasing competition, not cheap. Overall neutral, but would consider it if the market gives me lower levels. Probably would not be selling if I already owned it.

Details: I generally comment mostly on companies that I have had direct contact with, but Cody asked me to look at F5 (NasdaqNM:FFIV) a while back, so I thought I'd have a quick peek and see what's there.

F5 is in the business of Application Traffic Management, which is a relatively new piece of the networking world. The general idea is that you can use their products to direct and prioritize the traffic through your network depending on your business needs. For example, you might give the highest priority to two-way, real-time applications like VOIP, lower priority to a real-time, but one-way business intelligence application, and lowest priority to something that has inherent delays anyway like email.

It gets more complex than that, of course. You may have a large corporate application that runs on multiple machines in multiple locations. The ATM product could help to balance the overall load on your various servers as well as the network pipes connecting users to them. And it would adjust things in real time to keep things running as efficiently as possible.

This is important stuff, and it grows more important by the day, because networked applications like VOIP depend on an efficient network to work well. A VOIP system running over an overloaded, unbalanced or inefficient network will sound a lot like the early digital cellphones: dropped words, phrases, sudden delays and a general "jerkiness" to the sound that makes it bad news for you and your customers. And VOIP is only one of the many real-time and bidirectional applications coming along right now.