Tuesday, November 30, 2010

Experiment, Evaluate, & then Experiment again

From pricing to finalizing a user interface, experimentation can play an important role in helping a firm navigate a new market or offer a new product.

This engadget report followed Netflix as they experimented with the right pricing formula for its new streaming-only service.

Netflix's experimentation was not only limited to pricing, the firm also experimented with several UIs for the PS3.

Tuesday, November 23, 2010

Struggles with user adoption

This blog post covers the weak adoption of some SharePoint implementations.

According to a recent survey of over 300 business e-mail users, 80% of email users with SharePoint access continue emailing documents back and forth, instead of sending document links and using library services for check in, check out, and version control. This is consistent with the overall population of email users surveyed. 83% of email users prefer to email documents back and forth, instead of uploading the document on a public folder, shared drive, or workspace.

Getting users within the enterprise to adopt a new software tool can be difficult. Can the weak adoption rate be attributed to the company culture or is there a need for better software?

Friday, November 19, 2010

What would Buffett say for Garmin's future?

(Posted by: Kostis Chlouveraki, Nadia Tan, Florent Degates, Thomas Annicq, Erdin Beshimovs)

What would Buffett say for Garmin's future?: "A very interesting article states that the econofinancial future of Garmin may be predicted, if we apply the Buffett's stock-picking strategy. Some of the criteria that are stated in the article and are fulfilled by Garmin are given below:

1. Market Capitalization should be at least $250M (for Garmin is $5.7B)
2. Current Ratio should be at least 1.5 (for Garmin is 4.2)
3. EPS for the latest annual period should be above the EPS in the prior year and 5 years ago
4. Long-term debt must not be higher than 10% of working capital. This is equivalent to a low Quick Ratio, and for Garmin this ratio is close to 3.

Wednesday, November 17, 2010

Pricing digital textbooks – and how versioning could increase profits

(Post by Jinho Suk, Jungmoo Park, Sangouk Kim, Allan Jaenicke, & Arkajit Dey)

The market for digital textbooks is expected to grow exponentially over the coming years, but we see the current approach to pricing as a significant barrier to rapid growth.

In particular, we have focused on the effect of the strong 2nd hand textbook market. A survey conducted at MIT Sloan shows that 60% of textbooks are purchased 2nd hand. Through mining Amazon.com pricing data, we conclude that the presence of the 2nd hand market has a significant impact on pricing. On the one hand, it has the effect of raising prices through indirect appropriability: Books can be resold at around 70% of the original price. We also see less price competition and less variation in pricing across new, used and digital formats then e.g. in the ‘fiction’ category, which has a weaker 2nd hand market.

Below is an example of our findings:

Sunday, November 14, 2010

Data Hoarding In The Social Age

The social war is heating up. Facebook has long had a feature that permitted its users to import their GMail address book to help link friends.

Last week, Google changed its Terms of Service agreement requiring any service that imports Google Contact lists to allow Google the same type of access. But Facebook won't 'share' contacts with Google's GMail service.

In response, Google attempted to block Facebook, but Facebook has seemed to find a workaround.

Google's Response:
We’re disappointed that Facebook didn’t invest their time in making it possible for their users to get their contacts out of Facebook. As passionate believers that people should be able to control the data they create, we will continue to allow our users to export their Google contacts.

It will be interesting to see how this battle unfolds. If you were at Google, how would you respond?

Tuesday, November 9, 2010

Consumer surplus in the digital economy

This blog post by Matthew Yglesias has an interesting perspective on the economic impact of producing information goods.

"The gap between what a given sector contributes to measured GDP and what it contributes to human well-being has always been with us. But the ways in which digital technology makes the non-commercial production and dissemination of information goods viable opens up vast new horizons of consumer welfare. Whether or not someone would 'enjoy' manufacturing automobiles in his spare time as a hobby and distributing them to hundreds of thousands of people for free, it’s not possible to do. The marginal cost of building a car is pretty high, distributing cars is difficult, and the start-up costs of building a car factory are enormous."

Is this reasoning entirely true?

Sunday, November 7, 2010

Personal Pricing aka First Degree Price Discrimination

Here's an example of firm hoping to put personalized pricing to work.

Is this incentive compatible?

It would be interesting to see how Meineke consumers respond in practice -- I suspect there may be a variety of forces as work.

HT: Dan Sills

Tuesday, November 2, 2010

Another take at Net-Neutrality

This interesting opinion-article from The Tech argues against Net-Neutrality.

The article states:

Younger, wealthier, and better educated users are being subsidized by the old, poor, and less educated. As our holdover pipe from the dot-com bust gets utilized, and bandwidth becomes scarcer, the extent of that subsidy will increase. The ISPs, noting that they will lose customers if they raise rates uniformly, would like to pass the cost of revitalizing our network infrastructure onto those who are burdening it the most. The internet adepts, seeing the end of their free ride, now rail against the “un-neutrality” of this proposal, and seek to make it illegal for ISPs to perform such price-discrimination.


Tiered services work, and work well. They allow providers to better tailor services to customer needs, and bring the price of services in line with the cost of supplying them. With proper oversight to prevent monopolistic abuses, pricing innovation will improve the fairness of the system and ensure that future investments in network infrastructure are made optimally. Tiers are an encouragement — not a hurdle — to innovation, and will better allow end-use consumers to decide, through the free market, what they want their internet experience to be.

Should the telecoms be permitted to prioritize and price discriminate their data delivery services? Why or why not?