This will probably be my last post on this blog for awhile. However, this momentous news is so shocking that I must record it here.
CNN just released the news that Arnold Schwarznegger and his wife Maria Shriver have "split amicably." The Schwarzeneggers have just celebrated their 25 years of marriage two weeks ago. Reported by CNN, "At this time, we are living apart, while we work on the future of our relationship."
This is very sad news and I wish Arnold and his family the best.
Monday, May 9, 2011
LinkedIn is Worth $3 Billion?
Wow, I'm not sure who's doing the valuations these days but it seems that every social network website is worth billions! That's right, maybe I'm in the wrong major here. But I'll definitely remember to tell kids that Computer Science is the way to go.
According to WSJ, LinkedIn is seeking an IPO worth $3 billion! Now, considering how Gilt Groupe received $138 million in funding, $3 billion doesn't seem too ludicrous.
According to WSJ, LinkedIn is seeking an IPO worth $3 billion! Now, considering how Gilt Groupe received $138 million in funding, $3 billion doesn't seem too ludicrous.
LinkedIn said Monday it plans to sell 7.84 million shares at an estimated price range of $32 to $35 apiece, raising as much as $274 million. The price range values the entire company between $3 billion and $3.3 billion. The shares will trade on the New York Stock Exchange under the symbol LNKD.However, buyers beware. I'm skeptical of the recent social media bubble with Facebook and Twitter. Let's not repeat what happened in another dot-com fiasco please.
Wanna be a CEO? Check out who is earning the big bucks (and who isn't)!
WSJ released a composite chart featuring CEOs at U.S.'s biggest 350 companies. The pay period is roughly from May 1, 2010 to April 30, 2011. The total compensation calculated includes base salary + annual incentives + stock option grants + restricted stock grants + performance award.
While most people expect CEOs to earn millions each year, and they do, some CEOs have earned $0 as their income this year. You can check out the complete list at WSJ. But here are the highlights with Top 5 and Bottom 5.
Top 5 Paid CEOs of 2010
1. Viacom - Philippe Dauman - $84 million
2. Oracle - Lawrence J. Ellison - $68 million
3. CBS - Leslie Moonves - $53 million
4. Jarden - Martin E. Franklin - $45 million
5. DIRECTV - Michael White - $32 million
Bottom 5 Paid CEOs of 2010
1. Whole Foods Market - John P. Mackey - $0
2. Citigroup - Vikram S. Pandit - $0
3. Apple - Steven P. Jobs - $0
4. Google - Eric Schmidt - $1.8
5. Amazon.com - Jeffrey Bezos - $81.8
Does this list surprise you? I'm astounded by the $0 earning from some of the top technology firms. Google? Amazon? APPLE? I guess this is not a great indicator of how well a company is doing!
While most people expect CEOs to earn millions each year, and they do, some CEOs have earned $0 as their income this year. You can check out the complete list at WSJ. But here are the highlights with Top 5 and Bottom 5.
Top 5 Paid CEOs of 2010
1. Viacom - Philippe Dauman - $84 million
2. Oracle - Lawrence J. Ellison - $68 million
3. CBS - Leslie Moonves - $53 million
4. Jarden - Martin E. Franklin - $45 million
5. DIRECTV - Michael White - $32 million
Bottom 5 Paid CEOs of 2010
1. Whole Foods Market - John P. Mackey - $0
2. Citigroup - Vikram S. Pandit - $0
3. Apple - Steven P. Jobs - $0
4. Google - Eric Schmidt - $1.8
5. Amazon.com - Jeffrey Bezos - $81.8
Does this list surprise you? I'm astounded by the $0 earning from some of the top technology firms. Google? Amazon? APPLE? I guess this is not a great indicator of how well a company is doing!
Wednesday, May 4, 2011
What should Google do?
Early this year, Google announce that they will replace Eric Schmidt with Larry Page as the next Chief Executive Officer. Ironically, the reverse situation happened in 2001 when Page was the CEO. This April, Larry Page officially returned to his former executive position. Shuffling the power balance among the triumvirate – Page, Brin, and Schmidt – will grant Page complete control on product development and technology strategy. Mashable claims boldly that it is now “Larry Page’s company.”
Google has become a household name. Instead of searching an encyclopedia or a dictionary for an answer, most people will tell you to “Google” it. It all began with two Stanford graduates, Sergey Brin and Larry Page, and a simple mission – to “organize the world’s information and make it universally accessible and useful.” In the last eleven years since inception, Google has made several significant mistakes that have raised many criticisms.
Because of Google has the monetary and human capital to enter new ventures, Google has partaken in social media (Google Buzz), online video hosting (Google Video and YouTube), mobile phone industry (Android OS), and computer clouding (Google Docs) industries. Yet, how many of these projects are profitable?
During Google’s recent attempt with social media, Google purchased a blogging website, tried to buyout Friendster, launched its own online community website Orkut, and implemented Google Buzz, a messaging and social networking tool that integrated into Gmail. This happened sporadically over the last seven years (2003-2010).
Unfortunately, Google cannot battle Facebook vis-a-vis. Not only has Google’s profit earning been a disappointment to investors, it is lagging behind the Standard & Poor’s 500-index index and being outpace by Facebook. Instead, Google needs to consider a strategic alliance with LinkedIn or any social media website to utilize their best attributes: Google’s search knowledge and a reputable site with a large database. If Google does not hurry, Facebook will certainly overtake Google’s territory one day. Rumor has it that Facebook has a plan to enter the Chinese market with a little help from Baidu, China’s #1 search engine and Google’s largest rival.
In a similar situation with online video hosting, Google acquired YouTube for the price tag of $1.65 billion after the failure of Google Video in 2006. The deal made YouTube co-founders Chad Hurley and Steve Chen happy men, but what about the rest of us? Sadly, Google is still waiting to make back its money as of today. The latest news I heard is that Google is on track to recover 50% of what they paid the YouTube guys by 2011. In the words of Google CFO Patrick Pichette, “YouTube will soon be very profitable.” Keyword – soon.
When Google noticed that they are terrible at investments, they moved their energy to create in-house products. Two popular Google products are Google Docs, a cloud computing form of Microsoft’s Office software program, and Android OS, an open source mobile platform that challenges Apple’s iPhone OS as the market leader. Both are still in its infancy stage and share a striking flaw – they are not making Google money.
A major downfall for engineering firms is the lack of focus on increasing values for stakeholders, a very important factor for a publicly traded company such as Google. Instead of just releasing “cool” products, Google needs to focus on worthwhile endeavors in protecting the interests of investors.
I salute Google for its valiant efforts to create unique products such as Android OS and Google Docs. However, from an investor’s point of view, it is a death warrant for Google to try to disrupt either market with its reverse positioning. Especially when veterans Microsoft and Apple control the dominant market shares in their respective industry.
It is inevitable that one day Google will struggle to sustain its high growth rate. Indeed, Google has even mastered the art of network effects. But at what cost?
Business Week covered an article in January regard the current condition of Google:
“The creative chaos inside Google's halls—a decentralized jungle of innovation, as one prominent venture capitalist puts it—once empowered employees to make bold moves… [with] a culture has recently produced a string of flops.”
Now the billion-dollar question remains – what should Google do next? How will Page enhance its value for the stakeholders?
Google is infamous for their disregards against the normal standard. The company has a 20% innovation time off to allow engineers to work on pet projects. By allowing Google engineers to take 1 day off a week to work on an independent project of their interest, this has resulted in the conception of half of Google’s new products.
Yet, these only serve as supplements to Google’s core competency: a superior search algorithm unmatched by any competitors. I have the perfect proposal for Google to take things to the next level: Go back to what works!
According to the Official Google Blog, Google’s bread and butter are its search engine and its cost-per-click ad service, which together generate 99% of annual revenue. Not only has Google maintained the leader position in the U.S. search engine market, but Google’s value to users and advertisers is worth $119 billion.
Yet, no one at Google is working on improvements. The SearchEngineWatch Blog’s latest post reveals that Microsoft’s Bing.com jumped 5% in searches while Google.com declined 2%. In Hitwise’s recent survey of “search success rates,” Bing scored higher (81%) than Google (66%). Jaynotes’s finding concurs, “Often, Google fails where contextual topic search is critical.”
With the arrival of Page, Google’s Mountain View headquarter need to shake things up! After Page’s first monolithic move of company restructuring, it is clear that Page is on the right track. Now, Page must ensure Google’s dominant presence in the search market by continuously fine-tuning its search algorithm.
Because consumers’ switching cost is very low, Google certainly needs to maintain its reputable claim as the ultimate search engine. It is dangerous for Google to lose users at its current rate as advertisers pay for the potential foot traffic that Google can provide. Especially in the fast-paced world of high tech where technology can become obsolete overnight, today’s Google may become tomorrow’s Netscape.
The word “google” is synonymous to “search.” That is exactly what Google should do – Keep on searching!
Monday, May 2, 2011
Facebook + Baidu = Dream Team?
There has been rumors of Facebook teaming up with China's #1 search engine, Baidu. Baidu came to prominence when it took over the search engine market after rivaling with Google and eventually became the top dog. What does it mean if Facebook teams up with Baidu? One way for Facebook to make money is to license its search algorithm or form strategic alliances to leverage its humongous information database.
Facebook issued the following statement: "Facebook is currently studying and learning about China, as part of evaluating any possible approaches that could benefit our users, developers and advertisers."
Facebook issued the following statement: "Facebook is currently studying and learning about China, as part of evaluating any possible approaches that could benefit our users, developers and advertisers."
Sunday, May 1, 2011
You are now a Princess
Prince William and Kate Middleton's wedding has been dubbed the "wedding of the century." For those that stayed up during the twilight hours to watch the wedding, as did I, must have loved every regal moment. From the timeless wedding dress to the classic Aston Martin DB borrowed from Prince Charles, this was the perfect fairy tale wedding.
For royal wedding pictures, check out U.K.'s top tabloid newspaper Daily Mail:
This iconic balcony picture captured the happiness yet if you look in the lower left corner, it is very easy to spot the angry little bridesmaid, oh the irony...
For royal wedding pictures, check out U.K.'s top tabloid newspaper Daily Mail:
This iconic balcony picture captured the happiness yet if you look in the lower left corner, it is very easy to spot the angry little bridesmaid, oh the irony...
How Will Barnes & Noble Get Its Groove Back?
What is the fate of the brick and mortar bookselling industry? Borders just announced plans for bankruptcy and foreclosure of 226 stores in February. For Borders, they just made one too many mistake. Experts at Wall Street Journal have highlighted three missteps – operation of too many unprofitable physical stores; lack of sales in the outdated format of music CDs; and missteps of not joining the first the e-book wave. Seeing how rapid changes occur in technology, the brick and mortar bookstore and physical book selling industries are in grave danger.
Although Barnes & Noble dodged the bullet this round, the company must be ready to battle its biggest threat, the giant online retailer Amazon. Barnes & Noble has already tightened its belt by eliminating dividends while reporting a 7.3% profit in its latest fiscal quarter. As the largest book retailer, Barnes & Noble must avoid find ways to leverage its core competencies: upscale store atmosphere, superior customer service, and the NOOK e-Reader.
Here is my list of recommendations: 1) to enhance the brick-and-mortar stores’ ambiance and environment by opening newer redesigned stores, eliminating shelf space, and integrating in-store NOOK functionality; 2) to create partnerships with schools and Starbucks to drive NOOK adoption and capitalize on powerful network effects; 3) to introduce an unlimited subscription service on the NOOK to add value to the customers and gain market share.
From Borders’ failure, we recognize that the key to success lies within the fierce competition over e-book. Whoever dominates the e-book market wins. In order for NOOK e-reader to gain market share, Barnes & Noble must integrate NOOK into a store’s floor design. Many customers come to Barnes & Noble to browse and read books without purchasing anything. By allowing customers who own a NOOK to have special perks inside a Barnes & Noble retail store, it will increase brand awareness and promote NOOK sales. For example, Barnes & Noble can implement a member card that can be imbedded in the customer’s NOOK that will keep track of every book read by him. When he enters the store and swipes the card, the NOOK will notify him of a “Book of the Week” that is specific to his interests. The NOOK now has become a consumer’s personal shopper while he browses the store.
Barnes &Noble can further extend this strategy by expanding their existing partnership with Starbucks, which offers its coffee products through Barnes & Noble café. Last year, Barnes & Noble released a beta version of their Read in StoreTM feature on the NOOK. This feature allows users to read books on their NOOK in any B&N store, free for one hour. Essentially, NOOK owners gain free browsing access to Barnes & Noble’s enormous selection of books by walking into any brick and mortar store.
If Barnes & Noble wants to broaden its network effect, they should consider extending this feature to regular Starbucks cafés. Any NOOK owner would be able to enter a Starbucks and read any book on their NOOK for free. Given the ubiquity of Starbucks cafés, this partnership will offer many advantages for its consumers. It is advantageous for Starbucks as well because of their third place ideology. Starbucks uses the catch phrase “third place” to promote the ambiance of their stores – “there is home, there is work, and there is Starbucks”.
I see this as a win-win situation. If Starbucks were to continue to open additional locations in the US, more NOOK owners would be able to use their NOOK in more places. Likewise, if NOOK sales continued to grow rapidly in the coming year, Starbucks could expect an inflow of new consumers who have come in to buy a coffee while reading a book on their NOOK.
And here is my brightest and boldest idea – The Netflix Model. Netflix broke away from the traditional brick-and-mortar format with an Internet-based video rental business. It beat its competition with a completely different pricing strategy through the creation of a prepaid subscription service with unlimited rentals and elimination of single-rental service. Netflix singlehandedly destroyed Blockbuster and won the loyalty of 20 million subscribers.
Borrowing from Netflix, I want to adapt its “unlimited subscription” model to fit into Barnes & Noble’s e-book business. Barnes & Noble must develop its broad and open e-book platform, its relationships with smaller publishers, and its specific focus on books to offer an unlimited subscription model for a majority of its e-books.
Blogger J.D. Roth comments that most books published in the past century do not sell as well as e-books because of their comparatively higher prices, free books at the public libraries, used bookstores, eBay, and even Amazon’s used book marketplace. Barnes & Noble’s unlimited subscription model would revive millions of book titles that are otherwise gathering dust at publishers’ storage shelves.
Similar to the Netflix’s model, customers of Barnes & Noble’s unlimited subscription model would be able to “check out” a maximum of 2-3 books for as long as they wanted, and exchange their finished e-books for new ones at their leisure. Think of the model as a digital library rather than a digital bookstore.
According to The Washington Post, one study found that one in four adults does not read a book yearly. If Barnes & Noble could price its unlimited subscription model as low as one or two times the average price of a physical book per month ($15-$20), it would still profit immensely from the majority of Americans who read less than one book per month.
The main media industry leaders including Netflix and Apple have been successful because they make access to their products effortless for their users. The newly proposed plan offers consumers the convenience of one-click, on-demand e-book downloads without having to worry about the complexity of tiered subscriptions or the effort of comparing book prices. Additionally, the service would offer dramatically lower risk for consumers because they would not be stuck with a book they dislike.
Barnes & Noble’s ability to outlast the recession and competitors is rooted within the company’s strong brand in book retailing and foresight into digital books. With the implementation of brick-and-mortar store redesign, advanced partnerships, and new subscription platform, Barnes & Noble will regain its unyielding position as the number one book retailer.
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