As media owners find advertising revenue alone will not sustain their businesses, they face a battle to convince freeloading consumers to pay, writes Andrew Edgecliffe-Johnson:
For well over a decade, the prevailing orthodoxy of the internet has been that information wants to be free. Publishers, broadcasters and games developers alike are beginning to discover, however, that advertising alone is not providing the sustainable digital business model they expected for their expensively produced content. Read more
In the FT’s New Technology Policy Forum, Columbia University professor Eli Noam considers the merits of breaking up large telecommunications companies:
Separation is a tool, not a goal. There are other tools to achieve the same legitimate objectives, and they would be simpler and cheaper. The simpler way is to seek non-discrimination directly rather than through fiddling with a company’s structure. This could be done through regulation and legislation, but a more effective way might be through contractual arrangements that are specific to a company.
The FT’s Lex column suggests that for Sony, cost cutting alone may not be enough to get the company in the black. Despite the company’s rosy projections, sales of PS3 consoles are likely to remain challenged. And while movies should perform better this year than last, the film unit represents only 10 per cent of revenues.
The Japanese consumer electronics and entertainment group thinks it may break even at the operating level this year. That is a brave call as the company was losing $1bn a month in the last quarter of the year ending in March.
The FT’s Lex column suggests that while the European Commission may have levied a record fine against Intel, the penalty will not affect Intel’s dominance, or give AMD a new lease on life.
With about 70 per cent of the market for microprocessors – the central engine of every computer – Intel benefits from a self-reinforcing scale advantage that allows it to outspend AMD on research and development by more than four to one.
The FT’s Lex column suggests that in the hyper-competitive, low-margin PC market, consolidation is not the route to future success. Instead, PC makers should focus on offering a better range of products, such as netbooks, and penetrating new markets:
The conclusion for manufacturers is remarkably simple: sell everywhere, as efficiently as possible. Dell should deal with more retailers. HP should increasingly go direct to companies. Investors should scorn attempts to do anything more pyrotechnic than that.
In today’s Daily View video segment on FT.com, Lex columnist Dan McCrum ponders Microsoft’s decision to borrow in the bond markets for the first time, even though it has $25bn of cash on hand (news story here.)
His conclusion: like the cost-cutting announced earlier this year, this is another sign that the software giant is thinking harder about deploying its assets more efficiently – in this case, its powerful balance sheet. But for long-suffering shareholders such moves are of only marginal interest.
The FT’s Lex column examines why the Kindle is no panacea for newspapers.
Newspaper executives increasingly believe gadgets such as the Kindle, Amazon’s sleek e-book reader, might fix their industry’s malfunctioning business model. This week, the New York Times, Boston Globe and Washington Post announced plans to subsidise the cost of new Kindles to win electronic subscribers in certain markets. Even Rupert Murdoch, chief executive of News Corp, is making noises about handheld gadgets. If enough people bought them, the NYT, for example, could theoretically save up to 35 per cent of its flagship paper’s operating costs if it sold only paperless subscriptions.
Gadget Guru Paul Taylor reviews the best automated back-up products:
Simplicity. Leonardo da Vinci described it as “the ultimate sophistication”, while Albert Einstein said “everything should be made as simple as possible, but no simpler”. More recently, we have been urged to adopt the “kiss” principle – “keep it simple, stupid”. Read more
The FT’s Lex column examines the plight of one of China’s internet market leaders:
Investors generally know better than to expect a coherent long-term strategy from executives in the internet business. But when a $7bn company tears up its entire business model within a year of going public, it can be accused of pushing its luck. Read more
Gadget Guru Paul Taylor has been covering the launch of Amazon.com’s new Kindle DX. Today he takes a historical view of the product, arguing that Amazon is in fact a latecomer to the e-book game.
Based on the buzz around Amazon’s latest Kindle wireless electronic book reader – the big screen Kindle DX, which will cost $489 – it would be easy to think that the US online book and electronics retailer invented the e-book reader category. Read more