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    Published on: September 25, 2014

    This commentary is available as both text and video; enjoy both or either. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

    Hi, I'm Kevin Coupe and this is FaceTime with the Content Guy.

    One of the things I often hear, both in my work and at home, is complaints about high tech companies that change things up. Like when Facebook updates its site, thoroughly irritating all the folks who just got used to the last update. Or when Apple changes a plug or a cord or an adaptor, requiring customers to go out and buy more hardware so things can be charged or synched or whatever. (This really annoys Mrs. Content Guy.)

    The complaint usually goes like this: "I was happy. Why can't they leave things alone?" The corollary is: "They must be doing this just to make more money."

    I've generally been pretty sanguine about such changes. The whole definition of technology is that it has to move forward, and if that means buying a new cord or getting used to a newly designed website, I'm willing to do that.

    Except that this week, I am bereft.

    Lost in all the recent announcements by Apple about its new products was one little, but for me, profoundly important piece of information. Apple has discontinued the iPod Classic.

    That's right. Go on the Apple site, or go to its stores, and you won't find any more of these little babies. Apple didn't really make a big deal of it; it just sent the iPod Classic gently into that good night.

    I've owned several of these over the years, including the original, but this is my favorite - it has an enormous 120 gig hard drive, which allows me to have my entire audio and video library on it, with plenty of room to spare. I take it with me everywhere … I've listened to it in cars, on planes and trains, or I plug it into a Beats speaker at home for some really great sound.

    By technology standards, I guess this is sort of old school. No bluetooth. No touchscreen. No flash drive. It only has a click wheel, but it also has every song I've ever bought from Amazon, plus hundreds of albums that I've downloaded from CDs. I love it, even though I could do same thing with my iPhone or my iPad. There's just something totally cool about this tiny piece of technology.

    I guess I should've known that it wasn't long for this world when they dubbed it the iPod Classic. It's been years since they upgraded the software for it, so that should have been another clue. But I never really thought about it until I saw the stories this week.

    The whole definition of technology is that it has to move forward, but I must admit that I'm taking this personally. In so many ways, the original iPod was the beginning of so much that distinguished Apple from other companies. I'm not ready to move forward, and I think Apple should take pride in the fact that people like me feel so possessive about the iPod Classic.

    I know I'll survive. As human suffering goes, this doesn't exactly register as being very significant. And here's the good news. There are still iPod Classics available for sale via Amazon, and I think I'm going to buy one just to stick in a drawer for when this one, inevitably, breaks down.

    Still, I am bereft.

    That's what is on my mind this Thursday morning. As always, I want to hear what is on your mind.

    KC's View:

    Published on: September 25, 2014

    by Kevin Coupe

    The Chicago Tribune is reporting that Amazon plans to "boost staffing at its secretive Silicon Valley-based hardware unit by at least 27 percent over the next five years as it tests Internet-connected smart home gadgets such as a one-button device to order supplies." The move, the story says, represents a decision by Amazon founder/CEO Jeff Bezos "to double down on the No. 1 U.S. online retailer's hardware strategy. This is despite the lukewarm reception of Amazon's new Fire smartphone and some investors' criticism of its heavy spending on highly experimental projects."

    The strategy, the Tribune reports, is "detailed in a little-known government document and by people familiar with the matter."

    The story goes on to say that Amazon's Lab126 division, "which developed Amazon's Kindle and other consumer electronics devices, plans to boost its full-time payroll to at least 3,757 people by 2019, according to the agreement reached with California in June that would give Amazon $1.2 million in tax breaks. Amazon will invest $55 million in Lab126's California operations in Sunnyvale and Cupertino."

    The dream, as the story describes it, is of "Internet-connected dishwashers, thermostats and other household devices that can 'talk' to one another as ways to fuel demand for products and services. But skeptics say many of these devices cost too much for most consumers and could take years to go mainstream."

    Now, I have misgiving, and have expressed them here from time to time, about some of Amazon's recent strategic moves when it comes to hardware. As I've said before, this is a company that always has said that rather than selling stuff, it just wants to make it easier for people to buy stuff. I'm not sure how, but things like the Fire phone have struck me as crossing the line, as being too focused on aligning users with the Amazon shopping experience. It just seems craven.

    That said, I have absolutely no doubt that the connected household is in our future. It'll probably happen faster than anyone expects. And I think that it makes sense for companies like Amazon and Apple and Google to be actively figuring out how to offer an ecosystem that will make it more attractive to users.

    As for costing too much…did you see where Apple sold 10 million new iPhones last week? Make the offering attractive and compelling enough, and people find a way.

    It's an Eye-Opener.
    KC's View:

    Published on: September 25, 2014

    Walmart yesterday announced its most significant foray yet into the financial services industry, a partnership that will allow it to offer low-cost checking accounts to anyone over the age of 18 who passes an identification check, with no fees for overdrafts or bounced checks and no minimum account balance.

    The accounts, which will be branded under the GoBank name, are being provided by a company called Green Dot, and will be available by the end of October.

    The New York Times writes that the offering "is part of Walmart’s long-running push into financial services for people with little or no access to traditional banking. In recent years, many banks have reduced services to those with weak credit. According to the Federal Deposit Insurance Corporation, an estimated 10 million households in the United States do not use a bank.

    "Consumer advocates say that many people without checking accounts are forced into the financial hinterlands, where they have little choice but to turn to costly alternatives for basic transactions. Fees for these services can quickly add up, making saving even more difficult.

    "In an uneven economic recovery, Walmart is also pushing to win back customers it is losing to lower-price retailers, from T.J.Maxx to dollar stores like Dollar Tree and Family Dollar."

    In the past, when Walmart has tried to obtain the required federal charter so it could open its own bank, it has met enormous resistance from the traditional financial services industry, which has pulled out all the stops in terms of influence, lobbying and political contributions to stop the world's biggest retailer from getting into its business. Since abandoning its most recent effort to open a bank, Walmart has concentrated instead on partnerships and alliances that allow it to offer a variety of financial services without actually being a financial services company.
    KC's View:
    The stories I've read about the new offering don't say anything about the possibility of lawsuits and/or legislation designed to prevent Walmart from doing this, so maybe the partnership is constructed in a way that it can't be challenged … though I wouldn't be at all surprised to see traditional banks looking for a way to stop Walmart from actually launching this new services.

    I'm not sure that allowing Walmart to open a bank is the best idea; it makes me vaguely uncomfortable to have a retailer with that much influence over the economy. But there is little that traditional banks have done in recent years to give me any sort of confidence in them, and the fact that they are so scared of competing with Walmart speaks volumes. Walmart has the ability to change the banking game, because it won;t have the same priorities as traditional banks. For that reason alone, I'm happy to see it moving in this direction.

    And while I'm thinking about it, maybe Walmart could start thinking about ways to change the college loan game, figuring out how to help people - especially those in its target demographic - to get an education without going into a lifetime of debt, and still make a little money on the deal. Wouldn't that be extraordinary?

    Published on: September 25, 2014

    GeekWire reports that the US Postal Service "is asking federal regulators to approve a two-year test of USPS delivery of 'groceries and other prepackaged goods' in the early morning hours in big cities across the country, expanding beyond an initial test the Postal Service has been conducting with Amazon Fresh in San Francisco.

    "The filing yesterday with the Postal Regulatory Commission says that the expanded grocery delivery service could bring in more than $10 million in annual revenue for the Postal Service, but not more than $50 million per year. It’s part of a broader attempt by the USPS to diversify its business."

    The filing reads, in part: “Grocery delivery services are expanding across the nation, with businesses ranging from the nation’s largest retailers, to niche operators, to the popular car service Uber entering the marketplace … With its operational reach, the Postal Service has an opportunity to provide retailers a nationwide solution that offers a trained workforce and the trust and reliability of the Postal Service brand. By expanding its carrier services and offering customized delivery, the Postal Service can garner profitable revenue through new revenue streams.”
    KC's View:
    This is what I've long argued - the only way for the USPS to be more competitive is by being more competitive - offering better service and being more relevant to its users. Amazon isn't mentioned in the filing, but aligning itself with Amazon seems to be a big part of this strategy, and it makes a lot of sense.

    Published on: September 25, 2014

    The Financial Times has an enormously entertaining - and oh so British - analysis of Tesco's troubles with the context of the broader retail business and even the history of the British empire, which you can and should read here.

    An excerpt:

    "Retail is not just detail. Complacent and obsessed with their own rivalry, the UK’s big supermarkets have been to slow to adapt. The traditional family has been fragmenting, increasing casual and lone dining. The economic slowdown has made shoppers thrifty. More are meanwhile prepared to order food online … Like the family, UK grocering is fissiparous."

    Check it out.
    KC's View:
    Truth be told, I had to look up "fissiparous," a word I did not know and, to the best of my memory, had never seen before. (The definition, for those in the same boat, is "inclined to cause or undergo division into separate parts or groups.")

    This is just fun reading, especially when they refer to "chief executive Sir Terry Leahy, a Liverpudlian with vision," being replaced by "Philip Clarke, a fellow Merseysider understocked with that commodity," who "bore the curse of succeeding a charismatic boss who leaves just as the market turns nasty."

    To save you the trouble….according to Wikipedia, a Merseysider is a person who comes from Merseyside, defined as "a metropolitan county in North West England, with a population of 1.38 million. It encompasses the metropolitan area centred on both banks of the lower reaches of the Mersey Estuary, and comprises five metropolitan boroughs: Knowsley, St Helens, Sefton, Wirral, and the city of Liverpool. Merseyside, which was created on 1 April 1974 as a result of the Local Government Act 1972, takes its name from the River Mersey." (So, I guess, the Beatles were Merseysiders?)

    I love it when I learn stuff like this. I guess I'm just a sucker for an educational experience.

    Published on: September 25, 2014

    The Los Angeles Times reports that Smart & Final, the LA-based warehouse-style grocery chain, "raised about $161 million Wednesday through the public sale of nearly 13.5 million shares."

    The company, which currently has some 250 grocery and food stores in six states and generates about $3.2 billion in annual sales, is expected to use the majority of the proceeds from the IPO to pay down debt.

    According to the Times story, "Smart & Final is going public at a time of increased competition in the grocery space. Wal-Mart Stores Inc. and Target Corp. have both stepped up their fresh-food offerings, while e-commerce giant Amazon has also started testing grocery delivery."

    Smart & Final, the Times writes, has deep roots in Southern California, going back to 1871, "to a shop called Hellman, Haas Grocery Co. that sold daily necessities such as flour, chewing tobacco and gunpowder. The store was one of the first seven names in L.A.'s first telephone directory, according to the company website."
    KC's View:
    It makes me happy when I see businesses like Smart & Final continue to be successful … it has one of the more unique value propositions that I've seen out there, and it is just a good thing when in a world where companies like Amazon get all the ink, a business that started in the 19th century continues to innovate and attract customers.

    Published on: September 25, 2014

    According to 9 to 5 Mac, Ron Johnson - who rose to fame conceptualizing and running The Apple Stores, and then went down in flames when he tried to bring change to JC Penney - is planning a new startup.

    The new business has him "launching a high-end, on-demand delivery service for gadgets, according to several people who have talked to him about it. And he has recruited some former Apple employees, including one-time Apple VP executive Jerry McDougal, to help."
    KC's View:
    Good for him.

    I've never met Johnson, but I admire him … and my admiration grew when I saw an appearance he made at Stamford University's Graduate School of Business, talking about his business successes and failures.

    I wrote about it and linked to it on MNB, and you can - and should - check it out here.

    Published on: September 25, 2014

    ...with brief, occasional, italicized and sometimes gratuitous commentary…

    • The Chicago Tribune reports that sandwich chain Jimmy John's "said it has learned of a data breach involving credit and debit card data at 216 of its locations … it learned of the breach July 30 and is investigating. Jimmy John's said it believes that an intruder stole login credentials to remotely access cash register systems."

    According to the story, "Breaches occurred at various times from June 16 to Sept. 5. The company said stolen information may include the card number and in some cases the cardholder's name, verification code and/or the card's expiration date."


    • The Detroit Free Press reports that Sears-owned Kmart is closing five Michigan stores "as the company continues to struggle financially and look for ways to cut costs.
    The retailer, now a subsidiary of Hoffman Estates Ill.-based Sears Holdings, said it has decided to close its stores in Burton, Flint, Madison Heights, Port Huron and Rochester.
    Liquidation sales at those stores will begin Sept. 28. The stores are expected to close for good in December."

    Sears and Kmart already have closed 130 stores this year, and said just recently that more closures are imminent; these Kmart shutdowns are part of the new list.


    KSTP News reports that Iowa-based, 230-unit Hy-Vee, which has 17 stores in southern Minnesota, plans to open two stores in the Minneapolis-St. Paul region next year, with stores in New Hope and Lakeville.


    Bloomberg reports that Starbucks is ramping up its Russian expansion plans, even as US-Russia relations chill.

    According to the story, Starbucks "s expanding into Russia’s Ural Mountains, even as the U.S. levies economic sanctions against the country. Starbucks will open in Yekaterinburg this week and oil-rich Tyumen in October, according to a statement today. The outlets will be the chain’s first in the Ural region, which divides Europe and Asia. Starbucks, based in Seattle, will have more than 80 shops in Russia as a result.

    "In pushing deeper into the country, Starbucks will have to navigate simmering geopolitical tensions. Following President Vladimir Putin’s annexation of Crimea this year, U.S. and European Union banned lending funds and selling oil-drilling equipment to major Russian firms. Putin retaliated by banning certain food imports. Regulators also have shut down several McDonald’s restaurants in the country."

    Starbucks originally entered Russia in 2007.

    No doubt Putin likes to stride shirtless into his local Starbucks and demand quadruple shot espressos, just to prove what a man he is.
    KC's View:

    Published on: September 25, 2014

    Variety reports that Bill Carr, Amazon's head of digital music and video who "built Amazon.com’s digital music and video business into a global operation, as the company moved to compete with Apple and others in the space," plans to leave the company in December after 15 years.

    No reason was given for the 47-year-old Carr's departure.
    KC's View:

    Published on: September 25, 2014

    …will return.
    KC's View: