Apple Throwing Away Its Core-iPods

Apple's iPod Touch and iPhone have been hugely successful, however their original product the iPod has been dropping in sales.  As discussed in the article by the Globe and Mail, Apple can be seen as intentionally cannibalizing iPod sales by focusing on promotions of the iTouch and iPhone over that of the original iPod, so that customers will buy the newer, more expensive, and higher margin products over the cheaper, lower margins ones.  Intuitively to me, it would seem like the older models of iPods would generate higher margins due to more developed economies of scale while the newer models would be the opposite.  However, when you consider product lifecycles then intuition can be wrong.  If you look at the market for mp3 players these days, the number of competing brands is endless.  When the iPod was first introduced it was a novel product and could command high prices.  Now that that the market has matured over the past ten years, the price of iPods has dropped due to the high volume of competing products in the market.

By introducing new innovations through the various iterations of the iPod over the years, Apple have effectively been stretching out the life cycle curve by keeping the iPods in the growth and maturity phases.  For a market this tech-reliant, the decline of sales is a quick inevitability.  The original iPod has become the vanilla flavor of the mp3 player market and consumers want to try new things.  So you can see Apple's promotional strategy as cannibalizing the original iPod's sales, but I see them as making good use of product life cycles.  By regularly releasing new products, they always have a new product that is growing in sales to make up for old ones that are in decline.  So the original iPod isn't being cannibalized, because it was already slowly starting to sink.

MacDonald's Supersizes to Wi-Fi

It was reported back in December that McDonald's had reached a deal with AT&T to provide free wireless, and now it has finally come to pass. What does this mean for consumers? A new reason to drop by McDonald's on a regular basis. Having free WiFi could make for an important point of differentiation from other restaurants. With a consumer base that is becoming more and more "plugged in" to the internet knowing that you can go to McD's for a reliable hotspot could mean the difference between going to McD's or that other restaurant down the block. This move into WiFi puts McDonald's into closer competition with a different type of establishment, coffee shops.
You can see that McDonald's has made moves to develop themselves in that area with the introduction of McCafes in past years. Having marketed heavily to meal-time customers in the past, they have shifted tactics to focus on casual coffee drinkers. The introduction of WiFi is one more step in repositioning McDonald's away from their original image of a fatty hamburger chain.

You Won't Notice, But Gmail Is A Bit Safer Now

In recent news, Gmail will be making HTTPS the default option when sending out emails. HTTPS is essentially a type of encrypted connection that allows you to safely send out information or data without being hijacked. If you've done your banking online you have in all probability done so over a encrypted connection to the banking website. When dealing with sensitive information encrypted connections are pretty much the norm these days.

Making the push to HTTPS as a default highlights how online companies have to constantly address the security of their clients. If people can't trust a business to keep their information secure or private they will find one who they can trust. It can be a strong point of differentiation to be able to keep your clients information secure, something banks invest heavily on with regards to their online banking sites. Is this a change in Gmail one that you will really notice? Not really, but maybe we are taking our online security for granted.

Google Vs China - Is It A Bluff?

China is already fairly infamous for their attempts to control the flow of information online and keeping a Big Brotherly eye on people's actions online.  In recent news, Google and China have been butting heads over Google's censorship of searches for China's and recent hacking attempts on the emails of dissidents. Google has ultimately threatened to pull out of China. There is of course more to the story than we're being told, but this strikes me as a very odd move on Google's part.

There are a total of approximately 300 million internet users in China, pretty much equal to the population of the US. In China, the biggest search engine is Baidu with control of roughly 60% of internet searches and Google with around 30%. I'm just giving a rough estimate because even on the Financial Post these estimates vary (1). You have a multi-billion dollar company like Google in a market that is very difficult to enter and has extremely high future growth and you think they really intend to pull out of the market? Strategically it does not sound like Google is making a very credible threat. By standing against China, Google is positioning themselves as a politically charged entity when they should be remaining a neutral party. A search engine that caters to everyone should have no biases.

Jan 18th Update: It's been four days and it seems Google is still censoring search terms for the Chinese side of the internet. Will they follow through and exit the Chinese market? We will keep on watching for further developments.

Jan 20th Update: China has struck back at Google, accusing them of being a mouthpiece for the US. I wonder if the Google usage rates in China have been shifting for the past few days in favor of Baidu and other search engines. Google repositioned themselves on a political level and as a result have alienated a highly politically sensitive segment of their users.

Fund Raising Goes Viral

I thought it would be good to point out some worthy causes that have recently seen very large spikes in donations thanks to social media campaigns.

Before the end of 2009, Drew Carey pledged $1 million dollars to LIVESTRONG in return for 1 million follows on Twitter. In essence, we have a celebrity offering to give money in support of charity and all people have to do is add their name to the list. People love to associate themselves with good causes and giving them an appealing reason to recruit new followers has resulted in explosive word of mouth advertising for this campaign.

Another fund raising initiative that has gone viral is Red Cross's push for donations in order to provide aid for the survivors of the devastating. Within 24 hours, they have raised $1 million dollars in support of Haitian survivors. All people have to do is text to pledge their $10 donation and the money is charged to their cellphone bill. The key thing to note is Red Cross has made it extremely easy for people to donate. Texting to donate is extremely quick with no need to phone in or mail anything. Bypassing the barriers that delay or hinder people from taking the step from deciding to donate to the act of donating is extremely important.

These fund raising campaigns have been amazing for generating attention, but I wonder how they will fare in the long run? I hope they are not a novelty that will wear off over time.