Jag Venugopal's Blog

July 29, 2011

Here we go again, this time with the University of Northern Virginia

Filed under: India — Jag @ 6:45 am

Another fake university raided by the Feds. Possibly with lots of Indian “students”. The Chronicle of Higher Education has a nice article on how the scam works. And my favorite outfit, HTIR is mentioned!

July 25, 2011

Observations At A Border’s Store Under Liquidation

Filed under: Digital Living — Jag @ 7:12 am

This past weekend, the family went to Borders to see if there were any book bargains around. The place was packed to the gills with people everywhere. I’ve never seen such long lines at the checkout counters.

Any reasonable person would be forgiven for assuming that the going-out-of-business sale was particularly attractive, to force this many customers into the store. Said person would be wrong. Most titles in the store were discounted 20% off list price. Now, for most items (grocery, appliances, bed and bath, electronics, etc), 20% off list would be a decent bargain. But for books, 20% off list is too expensive. Borders, prior to bankruptcy, would routinely discount all purchases beween 20%-40%. Therefore the shoppers who mobbed the store were paying higher prices than usual.

What likely happened is that a large number of people read about the liquidation. These people had likely never shopped for books recently, and when they saw the 20% off signs, decided they were getting a great bargain.

We also noticed a lot of misfiled books. For example, books on business in the sports section, etc. That’s another time worn tactic I first learned about from Filene’s ‘automatic markdown’ basement shoppers. Basically, if you really like a book, but want it cheaper than the 20% off currently being offered, then hide the book in a totally unrelated section and hope it stays unbought until the prices come down to your liking.

My threshold for vulture sales is at 50%. The logic is that most books are discounted 30-40% on Amazon. If I got a book for half-off, I’d be getting a small bargain at Borders compared to what I could get it for at Amazon after taking the additional sales tax into account.

July 24, 2011

Can a bookstore compete with the Internet?

Filed under: Digital Living — Jag @ 8:00 am

Richard Nash, writing in CNN, attempts to explain the reasons for Borders’ failure, and tries to derive lessons from it. He writes:

“Bookstores can and should be sites for this conversation. Increasingly, the good ones are places where people seeking deeper engagement with their culture and society choose to congregate. They are offering language classes, reading groups, singles nights, writing workshops, self-publishing solutions.”

The problem, though, is that it is oftentimes difficult to get many people with the same interest into the same suburban bookstore. I might like a certain genre of nonfiction, but I doubt that there are scores of people in my town with the same taste in reading. However, on the Internet, I have absolutely no problem in finding kindred souls with the same likes and dislikes. What’s more, I depend on their opinions and reviews for many of my book purchases.

The problem is this… the Internet can offer all of what Richard describes, and do it better. Large numbers of interested readers can coalesce around shared interests. And while web sites may not offer  the immediacy of a face-to-face conversation, many reviews and opinions posted on the better sites have benefited from their authors being forced to write, rather than speak extempore. Have we reached the potential of the Internet in creating social networks around readers? Absolutely not. Will we get there? Absolutely yes.

For bookstores to survive and thrive, they need to provide an experience that cannot be provided over  the Internet. I’m currently at a loss to think about one potential example. So, it appears, are many book purchasers.

 

 

 

July 21, 2011

A Major Accomplishment

Filed under: Business — Jag @ 6:08 am

The US Government exited its investment in Chrysler. All told, it lost about $1.3 billion dollars (that’s billion with a “B”). The treasury hailed it as a “major accomplishment”.

One needs look no farther to examine the reason for many people’s antipathy towards the Obama administration than the above sentence. I hate to think of how many more “major accomplishments” the administration hopes to achieve with borrowed money.

For all the tall claims, what the government did was to prop up a chronically ill carmaker that churns out product that no one wants to buy. In a capitalist society, Chrysler would have gone out of business, and the resources consumed by it would have been put to better use. In a socialist society, this is not allowed to happen, thus perpetuating the drain on scarce resources by these companies. Often, this happens in the guise of protecting jobs, etc. A few thousand or tens of thousands of jobs are “saved”, while saddling the millions with the costs.

Milton Friedman must be turning over in his grave.

July 19, 2011

‘God-Man’ or ‘Gold Man’?

Filed under: Project Management — Jag @ 10:55 pm

A third count of gold, silver, expensive silk, diamonds, etc. was made at the deceased god man Sathya Sai Baba’s residence. According to the Economic Times newspaper,

“The inventory, the third in a month, yielded 34.5 kg of gold, 340 kg of silver and Rs.1.90 crore of cash till Monday night.”

Kinda makes you wonder why a supposed man of God, sometimes revered as God incarnate, needed to stockpile this much of precious metal and diamonds, not to speak of cash. Some reports also have dry fruit, saris and trousers tumbling out of the closets. Why, oh why, does a man who only wear robes need all this? I can understand the discovery of a cupboard full of hairspray though… that Africa-size afro probably needed a lot of the stuff. And I’m sure if they dig deeper, they’ll find the secret stash of “Just for Men, Jet-black color” lurking.

One possible defence mounted by his devotees is that all of this hoarding was done by unnamed others without his permission. But wait, wasn’t he the omniscient, omnipotent, omnipresent God that knew everything that was happening? If this kleptomania was that of his officials, could he not have put an end to this?

Of the people that donate to such gurus, I am reminded of P. T. Barnum’s famous saying: “There’s a sucker born every minute”. And in a country of 1.2 billion, there’s a lot many suckers to go around.

R. I. P., Borders

Filed under: Project Management — Jag @ 7:28 am

Word today is that one of our family’s favorite hangouts  is going out of business. I’m sad to see them go, and will miss popping into a bookstore on a whim to browse the latest offerings. Regrettably, with my purchases of the iPad and Kindle, and moving all my remaining book purchases to Amazon, I have been among the non-purchasing millions that contributed to Borders’ demise.

In the post-Amazon, post-eBook world, book retailing has become a brutal business. Stores need to stock a large collection of books to appeal to the book buyer. They need to pay for retail space, staff and utilities to run physical bookstores. Money needs to be sunk into inventory for buyers to browse around. And books have a saleable life of six months or less, before they get consigned to the bargain shelves.

Amazon has few, if any, of these constraints. Amazon’s warehouses are in suburban or rural areas, where the cost of land and buildings is proportionally far less than what a bookstore in the suburbs would pay. Without the need to maintain any stores, Amazon can invest heavily in automation and achieve economies of scale in its stock and dispatch processes. Further, Amazon’s cavernous warehouses can hold books indefinitely until they’re purchased. There’s much less need to remainder books that have not sold for a period of time.

As a result of greatly reduced costs, Amazon can afford to discount paper books heavily. The cost of paper books has steadily risen to the point where the average hardcover retails for $30 and the average paperback for around $15. However Amazon can afford to sell for a little over half the MSRP because of the advantages it enjoys from a warehouse dispatch model with no retail presence.  Borders could not match Amazon with its overhead and still manage to make a profit.

Borders made two big mistakes that contributed to their going out of business. First, when book retailing moved to the web, they chose not to sell books on the web, but instead redirected purchasers to Amazon. Sending customers to your competitor’s store is a fine way to put yourself out of business. Amazon spent years learning and refining its business processes and supporting systems; all the while, Borders did nothing.  By the time Borders built its own online operation, it was too late. Amazon.com and (to a lesser extent) bn.com were already well-entrenched.

A second blunder was to not have a strong presence in the eBook market. While Amazon was developing and selling three generations of the Kindle, and rival Barnes and Noble was busy at work on the now-suddenly-popular Nook, Borders stood blisfully on the sidelines, hawking a bunch of Sony e-readers, along with a rebranded Sony ebookstore. Eventually, they started selling Kobo e-readers and the associated Kobo ebookstore service. Both the Kobo and Sony are also-rans in an ereader market dominated by Apple, Amazon and Barnes and Noble. To date, Borders does not have its own ebookstore.

People will initially miss Borders, but most have already adjusted to the world of online book shopping and ebooks. Books are uniquely suited to online retailing — one relies on reviews and word-of-mouth to determine whether to purchase a book or not. The physical appearance of a book, or its touch and feel, is of little consequence to the purchase decision. Amazon, with its user reviews, provides all the purchasing information a prospective buyer needs. And if that is not enough, Amazon will provide the first chapter of any ebook free for a reader to sample.

So long, Borders. I will miss the 40% and 50% off discount coupons. And I will miss the treasure hunt of finding a remaindered gem in your bargain book department. And now, if you will excuse me while I browse the Kindle bestseller list.

July 6, 2011

Why the current crop of iPad competitors will all fail

Filed under: Digital Living — Jag @ 6:56 am
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Finally, various competitors to the iPad are out, more than a year after the launch of Apple’s game-changing tablet. From being an initial skeptic, I have now become a full-fledged evangelist. The iPad has become my primary browsing and email device.

 There are a number of competitors to the iPad; unfortunately, all the below efforts are doomed to fail, unless they make drastic changes in their approach.

  • Motorola’s Xoom
  • Samsung Galaxy
  • Acer something-or-other
  • RIM Playbook
  • HP Touchpad
  • A rumored Microsoft competitor based on Windows 8

 A professor of mine once said that to beat an entrenched product in the marketplace, it is not sufficient that the new entrant be incrementally better — it has to be better by an order of magnitude. To that, I would add the following:

  • If the new entrant has the same feature set as the incumbent, then the pricing must be drastically lower, to induce consumers to change their preference
  • If pricing is the same, then the product must be significantly better

 Unfortunately, with all of these tablets, neither of the conditions for success hold. They’re usually just the same cost as the iPad or more expensive, without being as good as the current leader. That’s a sure-fire way to get totally ignored. Android may one day be a great tablet operating system, but in its current version it does not beat Apple’s iOS in anything. Proprietary OS’es such as RIM’s QNX or HP’s WebOS are doomed because most developer momentum is likely to fall behind either Apple or Android, which at least has a strong presence in smartphones.

 I’m no fan of Microsoft, but I’m thinking that if Ballmer gets his company’s act together he might just be a contender. Microsoft already has significant tentacles into the enterprise, and a tablet with Office, Sharepoint, and access to corporate applications might just work. And no, it cannot be a reworking of the late lamented TabletPC. It has to be an entirely new, light product, with content and communication, that plays well within the Microsoft Enterprise ecosystem.

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