Monthly Archives: August 2010

John Gapper

One of the trickiest challenges for a company is continuous innovation – to keep updating and refreshing its products when the excitement of a product launch is past – so I take my hat off to Google.

In contrast to Microsoft, which in the past let products such as Internet Explorer and Hotmail get overtaken by newer rivals, Google is devoted to updating its online software suite, including Gmail and other applications including Google Calendar. 

John Gapper

The summer flurry of mergers and acquisitions now includes a couple of big hostile bids – those by BHP Billiton for PotashCorp of Canada, and by South Korea’s national oil company KNOC for Dana Petroleum of the UK.

Given the patchy record of mergers and acquisitions generally, and the reluctance of many companies to go hostile for fear of upsetting the target company and undermining its value, it raises the question of whether these bids are worthwhile. 

John Gapper

As the ousting of Mark Hurd as chief executive of Hewlett-Packard starts to fade from the headlines, one aspect of it lingers in my mind – the Google search.

Mr Hurd was made to resign by the HP board for allegedly breaching its business conduct rules over his relationship with Jodie Fisher, a marketing contractor to HP (and former soft pornography film actress).

The New York Times notes that:

The situation was made worse after HP discovered that Mr Hurd had viewed some of Ms Fisher’s racy acting on his work computer, signaling that he was aware of her past.

Mr. Hurd has told people that he did a brief Google search of Ms. Fisher in April or May of 2009, nearly two years after she started contract work for HP.

Well, that must send a shudder through many a corporate executive. A single Google search is a pretty flimsy piece of evidence but it is, of course, within the powers of the company to search its records in this way. 

John Gapper

Ouch. Michael Roth of Interpublic, the advertising group, does not seem to have much time for the high profiles enjoyed by his fellow chief executives Sir Martin Sorrell and Maurice Lévy.

Mr Roth ended his interview in the FT today with this withering observation on the leadership styles at WPP and Publicis, two of his biggest rivals:

The finger-pointing and whispering of Soho and Madison Avenue is not a game he is keen to play.

“I don’t talk about other businesses. I would say John Wren [Omnicom's chief executive] and I are more similar in that regard than Maurice and Martin. I don’t make it about me, I make it about our agencies.”

Make it about me, indeed. Well, it is true enough that both Sir Martin and Mr Lévy are often in the news and are seen as personifying their companies. 

John Gapper

Net neutrality was always a slippery concept, which may account for the fact that the New York Times and the Wall Street Journal have such different accounts of talks between Google and Verizon over the vexed subject.

For the NYT:

Such an agreement could overthrow a once-sacred tenet of Internet policy known as net neutrality, in which no form of content is favoured over another.

Contrariwise, according to the Journal:

The two companies have been negotiating with each other for months on a compromise on the thorny issue of so-called net neutrality – the principle that Internet providers such as phone or cable companies should not deliberately slow or block Internet sites or services.

The problem, and reason Google and Verizon have been talking to each other, is that no-one can exactly define net neutrality, and it would be devilishly difficult to draw up a law to enforce it, even if that were desirable (which I don’t think it is). 

John Gapper

There is something strange about the idea of publishers’ attempts to resist the e-book price-setting power of Amazon being investigated by the Connecticut attorney-general.

Given Amazon’s dominance of e-books through its Kindle device and software (it claimed this week to have 80 per cent of the market), it seems like the obvious target for anti-trust concern rather than the weak and divided publishing industry.

On the face of it, the initiative by Richard Blumenthal, the Connecticut attorney-general, is aimed at Amazon and Apple, which is publishing e-books for the iPad and iPod through its iBook service. In practice, however, Amazon would be pleased if he broke the “agency” pricing model. 

John Gapper

The speed at which global auto makers, particularly luxury car companies, are switching their focus of interest from the US to China continues to amaze.

BMW’s results on Tuesday, showing that its second quarter sales in China doubled from 22, 700 to 45,200, followed a declaration on Monday by Volvo’s new Chinese chairman that it will compete more directly with BMW, Mercedes and Audi.

China’s luxury car market is not only growing very rapidly but also has better margins than other markets, making it very attractive to global car companies. 

John Gapper

The iPad and other tablet computers may be the future (or at least part of it) for US magazine publishers, but it is making them confront an awkward reality – they have in effect been giving away their product for years.

The US magazine practice of offering extremely cheap subscriptions – often working out to little more than a dollar a month for a glossy magazine – is not only problematic in itself but is creating big difficulties for their digital initiatives.

The problem was nicely expressed to Women’s Wear Daily by Charles Townsend of Conde Nast, the magazine group that publishes titles including Vanity Fair and Vogue:

“Why will consumers pay 180 bucks a month for TV programming they never watch, don’t know the brands of, have no interest in, and will [only] pay a dollar a month for a magazine subscription to Glamour? There’s gold in those hills somewhere,” Townsend said. “How do I mine it?”

Well, there is a simple answer to that. They only pay a dollar a month for Glamour because that is all that magazine publishers charge. They have given away cheap subscriptions in order to establish a high “rate base” to attract advertisers.