When the Male Market Softens...Hooters Discovers Demographics

51% of the population are women. So are 60% of college students. And you know what is happening in the work force.

So it is no surprise that a bar/restaurant chain catering egregiously to 'dudes' is not enjoying the same financial success it might once have done. With household incomes in decline, there isnt enough money to go around for segmented family entertainment. Family, more than ever, has to be inclusive. Places where women feel uncomfortable, never mind unwelcome, have some 'splainin' to do.

In addition, getting expense account charges approved when the boss is just as likely to be a woman as a man makes submitting bills from the raunchy bar scene a more questionable career-enhancing strategy.

The larger issue is change in the face of demographic and psychographic changes that portend shifts in mores, values and, ultimately, purchase decisions. In the post-industrial economy, people are what they buy. Their choices broadcast more about them they did when price was all that mattered.

Men, perhaps more than women, have had to adjust. It's a process - and it is far from over. But any enterprise that assumes attitudes are static is likely to find itself on the wrong side of history. JL

Duane Stanford and Leslie Patton report in Bloomberg Businessweek:

Four years of revenue declines have forced Hooters to revamp its appeal. Women, even fully dressed ones, are welcome

Deceptive Delight: Secrets of the Fast Food Industry's Dollar Menus

How do they do it?

How can they possibly sell food for less than it would cost you to make it at home - and maybe even buy the raw materials at the grocery store?

It is not, as surprised as you may be to hear it, out of the goodness of their hearts.

The dollar menus are not loss leaders in the classic sense, although they work in a similar fashion to increase volume by enticing more customers to buy. According to the industry, they do not lose money, though they barely make a profit. And as many consumers have noticed, the size of the offerings has diminished as the price of meat, vegetables and the energy cost of transportation has risen.

The real secret to the dollar menu's power is that very few people ever buy just the dollar menu items. And that is where the profit lies. The drinks (super-size me!), sides and desserts that people purchase to accompany the basic dollar menu are the highest margin items. Drinks are especially big money makers since the volume of ice and water in the biggest sizes disguises the fact that in terms of ingredients they are almost indistinguishable from the smaller ones.

So, the combination of increased traffic and additional purchases makes the dollar menu a profitable strategy option for an industry whose customers have seen their incomes shrink in real terms over the past generation.

This is a relatively benign form of advantage-taking, especially when compared with the truly predatory mortgage lending practices of the past decade. People can buy just the dollar menu if they want to, whereas in the financial services case, they were required to agree to conditions that were patently misleading.

Americans have become more cost-conscious as real estate prices, jobs and wages have declined. Household debt is being paid down and depressed retail sales suggest that an economy built on credit is readjusting to reality. What the dollar menu example does illustrate is that people have to be discerning stewards of their own resources, however small the costs involved, particularly in times of constraint. JL

Candice Choi reports in the Huffington Post:

That cheeseburger on the value menu may end up costing more than you think.

How the Peripheral Becomes Central: Apple, Islam, Economics and the Unified Theory of Everything

Second year in a row: Apple introduces a new phone. Which, in many ways, is not all that different from last year's model.

Except for one thing, that most people think is peripheral, literally and figuratively. Until it becomes The Point.

Last year's controversy was about SIRI, the voice-activated assistant that was considered a toy-like after-thought. Except that it dominated the conversation and defined the new model.

This year? The new adapter. Which renders obsolete all previous adapters as well as all the connections to all the other Apple devices you might own, never mind the adapters in all the hip hotels and clubs in the world that finally got around to providing universal Apple connectivity.

Meanwhile, back in the rest of the world that doesn't orient its life around new phones (shrinking though its size and influence may be), there are riots in what last year were considered those brave and praise-worthy peripheral societies that produced the Arab Spring. In Europe, the affluent, central countries like Germany, France and the Netherlands are trying to figure out what to do with the nations no the periphery - Greece, Portugal, Spain et al - that are imploding economically.

So, maybe Apple is doing this as part of some global deep wave theory of change. Maybe the periphery is where the future gets revealed. We thought that convergence was where it was at. The end of history. Universal power sources. One platform fits all. But maybe that was bunk. Maybe Steve was right. His way or the highway. You dont want to fork over another $29 on top of whatever you're paying in yuan, euros, pounds or dollars? Fine, flash your Nokia and Android to your friends and watch them grimace at your humiliation.

Maybe all these seemingly peripheral changes in peripherals reveal something profound about the future as well as conceal something not so profound about the present. Like, that we're not quite ready for whatever the next big thing is but we have to produce a new phone or a new government or a new economic plan to keep our customers/voters happy.

Politics, economics, technology and $29 adapters. Who knew?JL

Andrew Leonard comments in Salon:

A hotly contested presidential election hits the stretch run, a deadly foreign policy crisis breaks out in the Arab world, new census figures prove that the richest Americans are still gaining on everyone else… and yet one of the most alarming stories of the week (judging by my perhaps unbalanced Twitter feed) appears to be the news that Apple’s iPhone 5 will come with a brand new dock connector

Google and Dynamic Pricing: Patenting Your Propensity to Overpay

This 'dont be evil' thing turns out to be, well, pretty open to interpretation.

Lots of people overpay. Or feel that they do. Buyer's remorse is a common emotion. But it turns out that the propensity to overpay can be identified, managed and even predicted. To the point where Google has patented a means of doing so.

In our current socio-economic state, living by the Golden Rule about doing unto others or being your brother's keeper are about as popular as submitting to the dentist's drill without novocaine. We dont appear to have a lot of sympathy for anyone else. Could be due to our straitened economic circumstances. Or maybe a couple of generations of prosperity have just coarsened us. Whatever the reason, taking advantage of others appears to be considered a fair part of the bargain between buyer and seller.

This is particularly interesting in the internet context: Nigerian investment scams, Chinese IPOs and American political promises all vie for the consumers' attention. But actually patenting ways in which people can be targeted to overpay seems a mite predatory, even by today's morally flexible standards.

The advantage the net has had over tangible, retail commerce is its transparency, convenience and generally lower costs. They are mutually supportive and deeply interwoven. As soon as it is perceived that one of them has been undermined, the others may soon follow. JL

Timothy reports at SlashDot:

A newly-granted Google patent on Dynamic Pricing of Electronic Content describes how information gleaned from your search history and social networking activity can be used against you by providing tell-tale clues for your propensity to pay jacked-up prices to 'reconsume' electronic content, such as 'watching a video recording, reading an electronic book, playing a game, or listening to an audio recording.'

Tech Design and Human Behavior: When Did Addiction Become a Good Thing?

Ethics and design.

The issue has been lurking out there for a while but we've ignored it, largely because we're so fascinated by the marriage of technological wizardry with behavioral manipulation. It's astonishing what people can be convinced to do without their realizing it.

But how is this different from what marketers have done for ages? From the earliest dealers in grains and fruits, to rug merchants, encyclopedia sales and TV pitchmen ('call now, operators are standing by...'). And why now?

Well, scale is one reason. The 'net has given us the ability to reach vast new audiences instantaneously. Unlike TV or radio or other media, there is no regulatory oversight governing truthfulness. So, the impact may be greater and the damage, when it occurs, both more widespread and harder to correct.

Secondly, there is that queasy human reaction to being manipulated without realizing it. Tell us partial truths, disguise the downside? Caveat emptor; let the buyer beware. Do your homework, check your sources, take responsibility. That is the mantra of the new age. Corporations have offloaded that burden on the rest of us, claiming somewhat virtuously, that self-governance makes for a stronger economy and probably makes us better people, too.

We could quibble with that, but in the service of greater convenience we have largely capitulated. The problem in technology and internet commerce comes with the absence of transparency. The lack of any explanation, let alone sufficient. Is it legal? Probably. Is it moral? Depends who you ask. Is it a positive development? We'll have to see. But we have some experience with this in the world's housing markets: Ireland, Spain, China, the UK, the US. And it ended up crashing the economy. The questions raised by the article below therefore pose some worthy questions the implications of the answers to which hit us where we live. JL

Jason Dreha comments in GigaOm:

Tech companies have become increasingly adept at manufacturing desire, but to what end? Behavior designer Jason Hreha argues that the industry needs to seriously consider the impact of its products. Are we helping our users lead better lives, or are we making them compulsive, impatient and distractible?

How Google Builds Its Maps - and What That Means for the Future of Everything

Why would you bother?

That is the question that arises when one realizes the effort, the sheer scale of the enterprise required to create, update and improve Google Maps.

And no, the answer is not that they think maps are cool. Or that the company is public-spirited and just want to help people. Though both may be true.

The answer, to the extent that it can be sussed out, is that Google is locked in a Death Match with the world's largest, most iconic brand. Apple. To survive, let alone prevail, it needs to optimize the variables that allow it to compete effectively in the race to global tech dominance.

For Apple, those assets include design, hardware manufacture and the execution of strategy that arcs from conceptualization to delivery of products that dont just work well, but invent and then set the standard for entire classes of technology. And to those who think that is not so special, the graveyard of entrepreneurship and innovation is overflowing with companies who managed to do one, but not the other.

What Google does really well is identify, collect and manage information. Lots and lots of information. Organizing and applying that information in ways that consumer/citizens can use it to their advantage is their strength. The advent of mobility as a Truth of modern living has helped their cause because it means that knowing where one is, where one wants to go and what one may find along the way is not just useful, but a source of revenue and competitive advantage.

Arch-rival Apple has sensed the same tremor, which is why it is morphing iTunes into networks. Control may be an outmoded concept, but maximizing one's leverage is still an imperative.

So, when you casually start figuring out where your friends are or where they might want to be, based on what you tell them, remember the vast quantities of intelligence and strategic direction encapsulated in those thumb-strokes. In the misty future you - or your offspring - may even be driving cars or traveling on other modes powered by that knowledge. Assuming Google plays it right, it's going to be a long, happy journey. JL

Alexis Madrigal reports in The Atlantic:

The company opened up at a key moment in its evolution. The company began as an online search company that made money almost exclusively from selling ads based on what you were querying for.

But then the mobile world exploded. Where you're searching has become almost important as what you're searching. Google responded by creating an operating system, brand, and ecosystem in Android that has become the only significant rival to Apple's iOS.

McDonalds Goes Vegetarian

OK, slightly exaggerated headline.

No, McDonalds is not eliminating meat. Put the epinephrine away and tell the ambulance dispatcher it was all a misunderstanding.

But they are opening their first all vegetarian restaurants. In India.

What's really interesting about this is not that they are opening these two locations in a country where eating meat is a religious taboo for many. Acknowledging local tastes is just common sense when you are a global corporation.

The mind-blowing aspect of this decision is how it may juice their business in the US, Europe and other carnivorously inclined markets. Organics are one of the fastest growing categories in food. As the population ages in most developed countries, the urge to prolong life becomes fiercer. So eating healthier has become a movement, which helps explains the exponential growth of locavore, greens-oriented cuisine.

In addition, businesses have noticed that when they offer products or services for one market, particularly when advertised online, demand emerges in markets for which the items were not intended and in which they are not available. At first.

Levis, among others, noticed this when it created smaller, tighter, less expensive jeans for what it thought was the Chinese market - until orders from other parts of the world starting pouring in.

So Mickey D's may be experimenting in a safe place where they know demand is present. But they have their eye on the prize, which is all those consumers who think the company's offerings have been too fatty and unhealthy. Until now.

And PS, yo. French fries are potatoes. Which are vegetables. So dont be questioning their street cred in this market. JL

The Associated Press reports in the Chicago Tribune:

McDonald's Corp., the fast food chain that brought the hamburger to the world, is opening what may be its first vegetarian-only restaurants.

The Social Media Paradox

Social media is such a ripe target.

The breathless hype. The overeager advocates. The self- promotional ethos. And the under-performance personified by the disappointment in Facebook, Groupon, Zynga and a host of other new-age avatars.

The critics are legion and occasionally number this blog among them. But they are characterized by a paradoxical conflict. Which is that their success as critics is dependent upon - and one might fairly claim - created by the very medium they so enthusiastically scourge.

There appear to be elements of discomfort and self-doubt in all this. Taking advantage of something one professes to despise will do that. But there is also some honest reflection on the false claims and misdirection so conspicuously prominent in the medium's essence.

The following essay, by Bob Hoffman, eloquently captures that paradox. He is an veteran advertising guy who has created an online persona called The Ad Contrarian and he has benefited mightily from his critique of social media myopia in his industry. He articulates why it can work for some, but probably wont work for most. And his honesty is as valuable as his clarity. JL

Bob Hoffman comments in his blog, The Ad Contrarian (hat tip Greg Satell):

I was invited to speak at a social media conference. The hen was in the fox house. My presentation was billed as a "fireside chat" between the organizer of the event (a guy I like and respect, Jason Falls) and myself.

The first question Jason asked me went something like this... "You have been critical of the social media marketing world from the get-go, yet you use it… quite well I might say. What's your point of contention and how can you reconcile that with your prolific use of the medium?"

Color War: Christian Louboutin Wins Appeal to Trademark Red Soled Shoes

Whew! Just in time for fashion week.

The eyes of the intellectual property community have been focused myopically on the seemingly endless Google-Samsung-Apple patent battles. Because that's where the big legal fees are, we hear you cynically intone.

But an equally interesting fight has been waged in the US Federal courts for the past year between two French design houses, Christian Louboutin and YSL (Yves St. Laurent). Louboutin claimed that he 'owned' the use of the color red on the soles of women's shoes. YSL disagreed.

To many mere mortals, the notion that anyone can own the use of a color seems a bit extreme. What's next, suing everyone with a green lawn who didnt pay for permission? But the court, in its wisdom, ruled that Louboutin has the right to use that color on shoe soles provided, Solomonically, that the uppers are a color other than red. Sounds a bit, well, persnickety to you?

Philistine! YSL won the right to use red soles as long as the uppers are red because it pioneered that particular 'look and feel.'

Which leads us to the larger point: that companies like Louboutin - and Apple - are fighting for greater restrictions on the use of intellectual property - patents, copyrights and trademarks - that fairly belong in the public domain. The whole point of intellectual property law is to protect the work of creative people and entrepreneurs who deserve the right to benefit from the work they have done in designing and building innovative products and services.

There are many who fear, however, that the increasingly restrictive applications of this concept will reduce the incentive to innovate while driving up prices.

We may well celebrate M. Louboutin's design sensibility and taste. But it is unlikely that many of us can afford his shoes. And the concern is that a growing string of such decisions may put large portions of the human spirit off limits. JL

Basil Katz reports in Reuters:

The bright red soles on French footwear designer Christian Louboutin's high-heeled shoes are so distinctive they deserve trademark protection, a U.S. appeals court has ruled.

Chinese Market Success May Prove a Challenge for Apple

Size matters.

And in China, that has two implications. One has to do with market share. The other with screen size. One of which is decreasing and one of which is increasing - and they are most emphatically related.

Questioning Apple's success is generally considered the province of the ill-informed or intellectually challenged. The company simply doesnt lose - at least from the perspective of those whose world view encompasses the past five years and the continental confines of Europe and North America.

But the reality outside that happily affluent slice of demography is somewhat different. Apple's Chinese sales have risen consistently, as the company will be first to tell anyone who will listen.

Which has driven them to an exalted SEVENTH place in the Chinese market for mobile phones.

Yes, you read that right. Seventh. Behind Samsung, Nokia (!), Lenovo and a bunch of other Chinese brands.

Apple advocates anticipate that the iPhone 5 will change all that. Isn't there always a 'this time it's different' chorus? But there may be a structural challenge for Apple on top of the financial challenge. First, the Chinese economy has slowed demonstrably. This is not to say their run at global leadership is over, simply that it is taking a breather, like most economies must do from time to time. But Chinese consumers have less to spend and costs matter to them. Even in the affluent major cities.

A separate but related structural development may cement Samsung's lead. As the following article points out, the mobile phone is now, for all intents and purposes, the computer in China. Which brings us back to size and specifically to screen size. Apple's is among the smallest on the market. And it is also among the most expensive. Which is not a healthy strategic combination. On top of that, Asian support for Asian brands may be a significant force in determining retail success.

Apple has proved itself nimble, intelligent and ruthless when necessary. Adjustments will be made and the race is far from over. But nothing is forever and as in every aspect of life, little things matter. JL

Abe Sauer reports in Brand Channel:

If leading rumors are true and the iPhone 5 increases its screen size from 3.5 to 4 inches, it will still be smaller than Samsung's--as well as smaller than products from LG, HTC and Huawei.

Why does this matter? Because in China, the mobile phone is now the computer.

Why Today's Consumer Cares About Corporate Reputation

It used to be so easy.

Consumers did largely what they were told. Even when there was a choice, it was probably between two competing brands. And the way to get one's message across was similarly focused: one or two or three TV channels, a couple of newspapers, drive-time radio.

But then things got complicated. Better data allowed manufacturers and their marketers to profitably target ever smaller slices of humanity. And communications? Do you have to ask?

But eventually the costs of global competition limited pricing flexibility. Perhaps most significantly - and subversively - in a bid to save money and margins, companies began demanding that consumers do more work: figure out treacherous voicemail customer service trees, bag their own groceries, manage their own accounts online or elsewhere. And business derived some advantage from this originally. People were confused, or short on time or lazy, so they did what came easiest, which generally redounded to companies' benefit. Homo Sapiens, however, did not win the evolutionary battle by being stupid. They figured out how to make this new system work for them, or at least not so well against them.

One of the things they learned was the relationship between the brands they bought and the companies that owned them. And they began to figure out which brand conglomerations represented what they wanted and who they wanted to be. Suddenly, companies found themselves being judged on a whole range of attributes they didnt realize they had to have, let alone master. Ethics, environment, employee treatment. The list is as long as the internet allows it to be.

Consumers are not making these judgments solely on emotional bases. They get that mores and values and ethics impact the quality of the goods and services they purchase, the prices they pay, the speed of the wait times they must endure, the ease of interacting with the company that sold them whatever they bought. In other words, the stuff that matters to them and that will influence their purchase decisions. Because they get that attitudes and behaviors in one realm probably reflect those in many others.

And since corporations have fought for the controversial right to be recognized as 'individuals' under law, consumers want to be treated like individuals by them. Corporations demanded that consumers take more responsibility for themselves. So they have. Even though it's not really clear to anyone what they were getting in return. But people want to know - and everyone is watching. JL

Richard Warnica and Tim Shufelt report in Canadian Business:

The commercial has no products, no voice-over, no sign at all of what’s being sold. Just images of athletes and their mothers. A quick flash of brands follows—Tide, Pampers, Gillette, Duracell—then a slogan: “P&G, proud sponsor of moms.”

Procter & Gamble’s “Thank you, Mom” campaign, rolled out at the London Olympics, is the most ambitious in its history. It’s also part of a growing trend that sees parent companies promoting their overall corporate brands rather than just those of products.

Can Electronics Stores Survive?

Labor Day has evolved over the years from a day of rest to a day of sales. Back to school, end of summer clearance, pre-Christmas.

Humans love to shop and they love gadgets. It is - or was - a match made for marketing. Some of the earliest innovations in consumer hard goods marketing came out of this industry. EJ Korvette, Kresge and Sears. Then came the major discounters like Crazy Eddie. His prices were insane, as the ads screamed, but so was the business. And it soon demonstrated just how much, by going bankrupt.

The ease of ecommerce - comparing, buying, returning when dissatisfied - has taken the rest of the pizzazz out of going to the store. So the retail industry - with its penchant for strip malls as well as the jobs and state and local tax payments that go with them - is powering down.

The initial counter-strategy was large screen TVs. Too bad virtually everyone had the same idea, prices plummeted, margins evaporated and everyone who wanted one, got one. Plan B? Mobile phones. And, what a surprise, everyone glommed on to that notion as well. Mere humans generally need only one, prices are consistent with a band of options, packages likewise and so much for that.

There may, eventually, be a market for used devices but Amazon is already on top of that one. GameStop grabbed first mover advantage with its iPhone resale concept, but the same dynamics apply: how many of the things do we really need, or where need is not part of the equation, want?

We suspect humans will always want to shop with other humans around. The concept of the market is as ancient as civilization. Surveys continue to report that shopping is the most popular form of entertainment in many societies. But the evolution must continue. Costs must come down. Real estate prices and taxes must moderate. Reliance on the auto must be supplemented. We love to look - but we also love convenience. There's a market opportunity in there for someone. JL

Ann Zimmerman reports in the Wall Street Journal:

Is there a future for electronics specialty stores? Not long ago, retailers such as Best Buy Co., GameStop Corp. and RadioShack Corp. were outmuscling competitors across America by offering one-stop shopping for the latest televisions, computers, videogames and gadgets.

Now all three are fighting to survive. The rise of online competitors like Amazon.com Inc. that offer low prices and downloadable products have siphoned customers and sales from these once-powerful retailers

Content Is No Longer King? The Rise of Visual Social Media

Content was supposed to be king.

But then a funny thing happened on the way to our love affair with literacy. Or, more accurately, our fling.

Actually, two funny things happened: Steve Jobs reminded us that design and visual presentation can sell; while mobile phones changed the way we look at the world.

Smaller screens, on which we have begun to view everything, made it harder to read both the fine print as well as the large. How things looked, how they grabbed our attention and communicated their essential being, became more important than what was said about them. And in our ADHD world, Twitter, Facebook, Pinterest and even Instagram reminded us that the unique essence of any message could be condensed with a bit of effort, a camera and a smattering of creativity.

Will it last? Whatever does? It's here now and businesses have to respond. Marketing and communications companies - and their clients - have begun to register that simply making an add small enough to fit on the screen of an Android or iPhone does not make it effectively mobile. In fact, it may be the opposite of what is required.

Fortunately, we homo sapiens have gotten pretty good over the centuries at figuring out how to communicate representative messages using illustrations rather than vocabulary. The combination works even better, if that can be managed, but we've had a lot of practice what with war, religion, family, emotion, work and entertainment to stimulate demand. Iconography R Us.

Businesses that adapt will probably flourish. Those that remain wedded to the beauty of their own verbosity may be in for an unpleasant surprise. JL

Ekaterina Walter reports in Fast Company:

Social media sites like Facebook, Instagram, and Pinterest have ushered in visual marketing as the breakout trend for 2012. When it comes to their products, businesses are learning to show, not tell, and visual content sites are fueling our desire for beautiful photography and sensational design.

Two years ago, marketers were spreading the maxim that "content is king," but now, it seems, "a picture really is worth a thousand words."

Man Bites Dog: Chinese Businesses Filing IP Lawsuits

Well, what do you know?

A company starts creating intellectual property and before you know it, someone starts ripping it off, so they decide to protect it. What a concept.

The Chinese, recently (in)famous for most gratuitously disregarding other people's patents, trademarks and copyrights, have found religion when it comes to intellectual property. And as so many conversions on the proverbial road to Damascus (or Dalian) are wont to have done, this one was inspired by self-interest. Namely, that as the Chinese increasingly believe they can compete on the global stage, they understand that protecting whatever value they are creating is essential to realizing future returns.

The world's largest country has long intended to evolve from a 'brawn' nation to a 'brain' nation. It was the messy details of how they were going to get there that remained unclear. But as Apple, Google, IBM, Facebook and a host of other tech companies - many co-founded by Chinese ex-patriots - have demonstrated, intangible ideas may matter more than tangible manufacturing plants.

And Chinese companies understood all too well the urgency of that protection regimen, because the most fearsome violators of their IP were their own countrymen. Having grown up fast in a tough neighborhood, Chinese companies are now working the system to protect the value they are creating. To do so, they are being pro-active in two ways; defending what they have actually created, and artfully using the IP laws to challenge others' IP rights in China and elsewhere to try to gain competitive advantage. Or, at the very least, a settlement that gives them access to something that might be useful.

No foreign business hoping to enter the Chinese market can expect to do so without trading some of their knowledge for the privilege of access. But the larger lesson is that as in so many other corners of the economic sphere, the Chinese have learned how to extract value by learning from the example of others. JL

Jia Lynn Yang reports in the Washington Post:

U.S. companies have long accused the Chinese of stealing their intellectual property. But now some in China are pointing the finger back.

Is Samsung's Pain Nokia's (and Microsoft's) Gain?

Wishful thinking?

The popular image of the Nokia Microsoft alliance has been something akin to two prisoners chained together. Or the last two kids at the dance without partners. They need each other given the preeminence of mobile in the tech firmament, but neither was considered a particularly strong partner.

Nokia once defined the mobile revolution but rested on its laurels and did not keep up with the evolution from mobile telephony to mobile computing. Microsoft? Well, they are still an industry behemoth, but their forays into a variety of new markets have not been particularly meaningful, let alone game-changing.

Following the initial burst of Rocky-like dancing up the steps for Apple, more and more analysts are beginning to consider the negative implications of the Apple intellectual property victory: more money for Apple, higher costs and fewer options for everyone else. Especially if Apple wins the appeal of the ruling that Samsung has now filed. Which seems likely.

So many people are rooting for insurgents. It is possible that in Asia, Samsung will begin to win some local legal victories by government dominated courts that justly fear the strategic implications of Apple dominance. Japan and China may already be signalling that sort of movement. But this has created openings for new designs and and new products that evade the Apple patents and provide comparable services at a more realistic price.

There is also some evidence that Apple gets the need to play nicely with others. Reports suggest that Apple and Google have begun discussions to work out their differences and attempt to find mutually agreeable solutions. Only lawyers benefit from the alternative. JL

Adam Ewing, Adam Satariano and Hugo Miller report in Bloomberg BusinessWeek:

Nokia Oyj (NOK1V) and Microsoft Corp. (MSFT), both looking to increase U.S. sales of smartphones, stand to get a much-needed boost as Samsung Electronics Co. (005930) products face a possible ban and handset makers come under pressure to consider alternatives to Google Inc. (GOOG)’s Android software.

Amazon's Next Disruptive Competition: Cloud-Based Web Services

Publishing's eviscerated. Retailing's devastated.

Lots of smug tech analysts are chuckling and saying 'we told you so.' Disintermediation. The web changes everything. Traditional markets and the companies that depend on them are history. We're smarter than you are - and we're richer, too.

Our advice to the brogramming brotherhood and their cheerleaders:look over your shoulder. Amazon's now coming for you.

On the way to dominating those markets, the company had to use a lot of data storage and computer server space. So it figured out how to reduce its own costs. And in the process a business was born. If was doing it for itself, why not sell that expertise - and those services to others? Defray costs, maybe make a few bucks. Only it turned out to be a bigger idea than that. Way bigger.

In the same way that Amazon reduced the expense and increased the convenience of shopping - and even reading - it has now fixed its sights on web services. Which puts it into direct competition with Oracle, Microsoft, IBM, Google and a host of other companies whose business acumen has generally been validated over the years. About which it has no fear. With good reason.

Because it has redefined markets before by lowering costs and raising convenience. So the betting is, based on its record, it will do so again. JL

Quentin Hardy reports in the New York Times:

Within a few years, Amazon.com’s creative destruction of both traditional book publishing and retailing may be footnotes to the company’s larger and more secretive goal: giving anyone on the planet access to an almost unimaginable amount of computing power.

PayPal Discovers the Mall

Going both ways.

Traditional credit card companies have done their best to capitalize on the exponential growth in ecommerce. Using their investment in security and relying on their deep financial reserves to offset the cost of potential fraud, they have made the transition in a relatively seamless fashion.

Now PayPal is returning the favor. The online payments system has inked a deal with Discover, the also-ran credit card company formerly owned by Sears, enabling borrowers to use their PayPal credit offline. And they are focusing on the dramatic rise in mobile payments. This makes good strategic sense for both PayPal and Discover. PP gets access to a much broader market and Discover gets a much-needed shot of online adrenaline to bolster its lagging competitive fortunes versus American Express, Visa and MasterCard.

The danger is that it is enabling consumers to spend more at a time of deep economic dislocation. Recent data have confirmed that for the majority of Americans, employment is down, incomes are down, net worth is down - and membership in the middle class is down over 10%. One of the only bright spots in the economy is that people have been forced by these circumstances to cut back on household debt - and have done so more than most economists believed was possible. Handing these cash-strapped consumers another inducement to spend does not seem like a great idea. The companies involved were not elected to solve the nation's problems but with the new consumer finance watchdog agency up and running, preying on the vulnerable has become a less certain money-making tactic.

Hopefully this deal will simply increase the efficiency of funds flows for consumers who can afford them. It may also enhance the speed at which online and tangible markets converge. And that is both a strategic necessity and benefit for commerce.JL

Andrew Johnson and Robin Sidel report in the Wall Street Journal:

Consumers are getting yet another payment choice at the cash register.

PayPal, the online-payment unit of eBay Inc. announced a deal with Discover Financial Services that will allow shoppers to tap into their PayPal accounts.

Waste Not, Want Not: Why Targeted Internet Ads Aren't Working Like They're Supposed To

Knowing just enough to be dangerous.

How many times does the average person hear that about someone who is supposed to be an expert? Or receives it as a kind of false self-deprecation from a colleague trying to play down how much he or she believes they really do know?

We can not help with office anthropology, but that criticism may capture the problem with the current generation of targeted internet ads. Sharing propositions allegedly designed for you but containing a fatal marketing flaw has become a source of cult humor. Yes, I live in an affluent zip code. But no, I am not personally wealthy enough to be in the market for a butler. Or a chilled wine cooler. Or a BMW that costs more than my rent.

The problem seems to be just enough information to appear interesting but not quite enough to ensure accuracy. There is a debate about whether there is enough information available yet or whether marketers are just too lazy and/or cheap to really dig into it.

Defenders of the first proposition (mostly marketers) - insist that there is not yet enough information - claim that privacy rules and public sensitivities prevent them - as yet - from developing the sort of precise targeting that would accomplish the goal. Supporters of the second proposition (mostly tech and data geeks)are certain its just that the first crew either doesnt know how or doesnt want to be bothered spending the time and money to get the results they want.

We throw our lot in with the latter group. The public has proven time and again that matters of privacy and sensitivity are somewhat interesting to talk about if you have nothing else to do, but utterly irrelevant if they can scarf up a 10% discount at their favorite merchant in return for a few pieces of 'harmless' information. In other words, the data are there. And more is coming. Government regulators are supine in the current political environment and consumers just do not care enough, despite the efforts of civil libertarians to warn them of the dangers.

The issue may be that we have not yet developed sophisticated enough methods, especially given the budget constraints in a recessionary economy in which senior executives are demanding certainty before releasing funds. So marketers do the best they can with what they have, meaning the results are disappointing - and the 'production quality' is too often somewhere between cheesy and embarrassing. The executives may well be short-sighted and the marketers may be struggling to put it all together, but the future is clear. Targeting will work eventually. And we may all be shocked by what appears to be how much the 'they' know about us.

We may forget that we have provided them with all the information they need. But if past is prologue, our complaints will be about the size of the inducements, not the data that got them to us. JL

Farhad Manjoo comments in Slate:

Targeted Web ads are too dumb to be useful and just smart enough to make you queasy.

Why We Choose the Brands We Do

The first indication we were in a post-industrial society came when it was apparent that price was not necessarily the most important factor in a customer purchase decision. Our Maslowe-vian needs had been addressed. Other forces compelled us to act.

We may now be entering a second phase: where the product and its features dont even matter.

It seems like the science of analyzing why we buy has been around forever.

Package design, store layout, catalogue product placement, the demo and psycho graphics of just about everything. Been there, done that.

But we can not leave well enough alone. The Holy Grail of Marketing remains being able to predict the purchase decisions of a single consumer based on their history. Researchers have come tantalizingly close, but the ultimate prize remains elusive.

The latest iteration employs scientific research-based principles involving eye movement and a host of other involuntary reflexes. While earlier efforts may have been aware of such impulses they were not always able to capture them. Now they are.

There are, of course, concerns about what might happen if this data falls into the wrong, unscrupulous hands. It goes almost without saying that they may already have. But given society's penchant for convenience, the evidence suggests that we are, so far, comfortable with the trade-off. And probably will continue to be. JL

Christie Nicholson reports in Scientific American:

A recent study finds that we might often choose brands and products for reasons that have nothing to do with the actual brand or product.

There Goes the Neighborhood: Artists, Organic Groceries and Real Estate Values

Life follows art. Literally.

As earnest politicians call for cuts in anything that does not have science, technology, engineering and math as its purpose, actual people around the world are following artists into derelict industrial neighborhoods once thought notable only for their aged brick and copper wiring.

Whether in London, Rio, New York, Paris, Shanghai or dozens of other cities around the world, the arrival of artists, organic grocery stores and chic cafes signals the start of urban revival. In fact, we may have become too clever by half in anticipating these movements. As in so many other facets of life, computer algorithms assist businesses in identifying the potential elements essential to reclamation and naming them before the first coffee shop even hoists its marquee.

The public policy implication is that people may work on serious math-based tasks to pay the bills, but universal education, communication and travel have enhanced appreciation of a more diverse lifestyle. Auto registrations are down from Beijing to Brooklyn. Big companies are moving back downtown from their leafy enclaves in the suburbs because that is where the talent they seek wants to live. Urbanization is the mega-trend on which every demographer and economist agrees.

But one has to enjoy the irony that this massive readjustment is being led by people whose value to society is dismissed by those who ostensibly are elected to lead us into the future. JL

Will Doig reports in Salon:

Trendy enclaves get discovered right away. Artists leave, Starbucks arrives!