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    Published on: September 8, 2017

    by Kevin Coupe

    This has nothing to do with retailing, though it does point to how technology companies are changing the competitive landscape in a number of areas.

    The Hollywood Reporter has a story the competition among various studios for the rights to distribute new James Bond films. The background on this story is that Eon Productions, which co-owns the right to the Bond franchise, has had deals with various studios over the years; Sony distributed both Skyfall and Spectre, each of which grossed in the neighborhood of a billion dollars. (The profit was considerably less, though still in the hundreds of millions.)

    The Bond franchise, which has been around since 1962, is one of the consistent jewels of the movie universe - the movies always make money, some more than others, and have been creatively reinvigorated since Daniel Craig began playing 007 in 2006’s Casino Royale. (Craig has agreed to do one more, his fifth, which is scheduled is be released in late 2019.) Which is why a number of studios - Warner Bros., Universal and Fox - all have been in negotiations, along with Sony, which would like to get Bond back in the fold.

    But guess what. There are two other companies said to be in the mix.

    Amazon and Apple.

    According to the Hollywood Reporter, “the emergence of Apple … and Amazon shows that the digital giants consider Bond one of the last untapped brands (like a Marvel, Pixar or Lucasfilm) that could act as a game-changer in the content space.”

    Which is what both companies want to do, as they look for Eye-Opening ways to expand their respective ecosystems and integrate themselves as much as possible into their customers’ lives.

    That’s the battle that every business has to fight these days … never just on familiar territory for traditional customers and with orthodox business plans. Indeed, doing things the way they’ve always been done probably is a prescription for disaster.

    Now, there are all sorts of implications here. Maybe 007 using an iPhone? Maybe his Aston-Martin being equipped with either Siri or Alexa? (Actually, how cool would it be if Amazon programmed its Alexa system, or Apple got its Siri system, to answer to “Moneypenny” or “Q?”)

    There’s only one thing I can’t figure out … which is why Netflix isn’t in the mix. Though I wouldn’t be surprised if it stepped in with a last minute offer and won the contest.
    KC's View:

    Published on: September 8, 2017

    The consumer credit reporting agency Equifax yesterday said that hackers had gained access to the personal data, including Social Security numbers and driver’s license numbers of some 143 million US consumers.

    The New York Times writes this morning that “criminals gained access to certain files in the company’s system from mid-May to July by exploiting a weak point in website software, according to an investigation by Equifax and security consultants. The company said that it discovered the intrusion on July 29 and has since found no evidence of unauthorized activity on its main consumer or commercial credit reporting databases … In addition to the other material, hackers were also able to retrieve names, birth dates and addresses. Credit card numbers for 209,000 consumers were stolen, while documents with personal information used in disputes for 182,000 people were also taken.”

    “This is about as bad as it gets,” Pamela Dixon, executive director of the World Privacy Forum, a nonprofit research group, tells the Times. “If you have a credit report, chances are you may be in this breach. The chances are much better than 50 percent.”

    The Times writes that “the company handles data on more than 820 million consumers and more than 91 million businesses worldwide and manages a database with employee information from more than 7,100 employers, according to its website. Equifax also houses much of the data that is supposed to be a backstop against security breaches. The agency offers a service that provides companies with the questions and answers needed for their account recovery, in the event customers lose access to their accounts.”
    KC's View:
    I guess the odds just went up that many of us are going to be getting emails from banks and retailers suggesting that we change passwords and issuing new credit/debit cards.

    While this is pretty bad, what is even more reporting is the report that in the days following the hack, but before it was reported publicly, three Equifax senior executives, including the CFO, apparently sold stock that they owned in the company. Hard to have a lot of faith in a company where senior execs behave so faithlessly.

    Published on: September 8, 2017

    There has been a ton of coverage in the media of Amazon’s announcement yesterday morning, reported here on MNB, that it has begun the search for a second headquarters city in North America that it said “will be a full equal to Amazon's headquarters in Seattle, and is expected to grow to 50,000 employees as part of the company's ongoing job creation,” and that it is prepared to invest more than $5 billion in construction and operation of the new facility.

    The Seattle Times writes that “the company said it’s aiming for a metropolitan area of at least 1 million residents, opening up, theoretically, a few dozen cities in the U.S., from New York to Tucson, and a handful more in Canada. It’s unclear whether Amazon would consider a bid from a Mexican city.

    “The company also mentioned proximity to good universities and a pool of well-educated employees, particularly software engineers, to draw from.” Also of importance to Amazon, various stories point out, is the existence of a strong public transportation system and a modern, accessible airport.

    Among the cities that seem to be most prominently mentioned are Atlanta, Austin, Boston, Calgary, Chicago, Denver, New York, Pittsburgh, Toronto, with a number of other cities and states - including Milwaukee, Minneapolis and Connecticut - saying they plan to make bids.

    The Seattle Times has a story suggesting that this move could have enormous negative implications for Seattle, which has served as Amazon’s home since its inception and which has enjoyed enormous economic growth as a result.

    “Even slowing from the pace of growth here would be felt in mostly negative ways,” the Times writes. “It might moderate house prices some — but remember that cuts two ways, hurting owners’ biggest source of household wealth. In the long run, barring war, volcano eruption or severe earthquake, Seattle real estate is now West Coast pricey.

    “Things could get dicey in a serious recession or other downshift where Amazon must make choices, including which location becomes the real headquarters amid a severe restructuring and downsizing. The Midwest is littered with headquarters losses. If Seattle lost out in such a scenario, it would make Boeing’s move to Chicago look like a brief squall by comparison.

    “Many will say it can’t happen. Amazon has too many sunk costs here and Seattle offers too many advantages. Even in the worst-case scenario, other tech giants would rush to fill any void. Maybe it’s nothing more than Amazon deciding it’s outgrown the viable footprint here. And maybe all this is true.”
    KC's View:
    This competition, I suspect, will end up being a lot like the Hunger Games, and will make the traditional competition to host the Olympics seem like a tea party in comparison. After all, the Olympics tend to have a transitory impact, and Amazon could maker a long-term difference in the economic health of a community.

    I also think that while Canada might look interesting, Amazon wouldn’t want the political backlash of moving outside the US.

    I got a number of emails yesterday suggesting places that people think Amazon ought to build HQ2, but I have to wonder if many of the emails and stories are missing one point that could be important to Amazon. I think that it will be looking for a state or community that it sees as being in synch with its own political and cultural priorities. That would mean being friendly to minorities and immigrants, and being progressive in its relationship with the LGBTQ community. It would mean a place that is not mired in divisive debates about bathroom access, or about the meaning of confederate statues, or about whether immigrants play a critical role in the country’s growth. It probably means a blue state, or at least a blue community (like Austin) that happens to be in a red state.

    I’m just speculating here, but I think this kind of stuff would be important to Amazon. At the moment, I’m thinking that Detroit or some community in Ohio seem like potentially strong candidates.

    Published on: September 8, 2017

    • Walmart this week announced that it has opened its 1,000th grocery pickup location in one of its stores - and ironically (or perhaps deliberately), it was in Seattle, right in Amazon’s backyard.

    Mike Turner, vice president of eCommerce Operations for Walmart U.S, released a statement in which he said, “Customers from Atlanta to Albuquerque and Nashville to New York have told us what an ally Online Grocery Pickup is in their fight to save something so important – time … Our daily mission is to help our customers keep a little more money in their pockets and add more time in their schedules. Online Grocery is doing that for the millions of customers who have tried the service, so we won’t stop with store 1,000.”
    KC's View:

    Published on: September 8, 2017

    Twice has a story about a new study from the Consumer Technology Association (CTA) saying that 55 percent of millennials who responded to survey questions “are eschewing live TV in favor of self-recorded and on-demand content,” as compared to 35 percent of people over 35 who prefer on-demand viewing.

    Additional findings include:

    • “Sixty-seven percent of respondents said they didn’t mind sharing their viewing habits with websites/apps.”

    • “Percentage of respondents who preferred that content networks know their viewing habits so networks can show relevant content recommendations: 64 percent.”

    • “Percentage of respondents who preferred content networks know their preferences so networks can show them relevant ads: 62 percent.”
    KC's View:
    This desire to have things their own way goes beyond just how they consume television programming. It actually reflects a broader trend … which is why retailers have to be more focused on what consumers want than on their own operational priorities. All the internal efficiencies in the world won’t matter if they deliver an irrelevant product or service.

    And by the way, it isn’t just Millennials … many of us feel this way. Which explains yesterday’s FaceTime video about how I think Starbucks forgot this.

    Published on: September 8, 2017

    The Financial Times has about how by 2024, when it is expected to host the Olympics, Paris will be a city transformed …and in a way that could have huge and far-reaching implications for all of the world’s great cities, and therefore businesses that operate in all those places.

    An excerpt:

    “Vehicles with combustion engines driven by private individuals could well be banned from the city by then, says Jean-Louis Missika, the deputy mayor, whose responsibilities include urban planning. He gestures out of his office window in Paris’s city hall at the busy rue de Rivoli. By 2024, driverless shuttle buses should be going up and down the road all day. Olympic visitors will see a vision of the post-car city.

    “Anyone watching lorries calmly unload on pedestrian crossings in today’s Paris will struggle to believe this. Paris is now dirty, chaotic, years behind the transport frontrunners Amsterdam and Copenhagen and, according to its mayor, Anne Hidalgo, suffers 6,500 deaths a year from pollution. But that’s largely because Paris was built pre-car, and never had the space for the 20th-century technology.

    “Now, as private cars start fading out, pre-car cities will come into their own. Paris, capital of the 19th century, could be the capital of the 21st. The city is already unrolling the future: raising the price of parking, adding bike lanes and planning to ban diesel cars by 2020. Paris has all the qualities to become the world’s first post-car metropolis.”

    Totally worth reading, because it describes a world that seems entirely possible, that will create challenges as well as opportunities. You can check it out here.
    KC's View:

    Published on: September 8, 2017

    • The New York Times has a story about something called “ruby chocolate,” which a Swiss chocolate manufacturer says deserves to be considered in the same way as dark chocolate, milk chocolate and white chocolate.

    The company that makes it, Barry Callebaut, describes it as “a totally new taste experience, which is not bitter, milky or sweet, but a tension between berry-fruitiness and luscious smoothness,” and is made from Ruby beans from Ecuador, Brazil and Ivory Coast.

    However, skeptics believe that the concept of a red chocolate is more about marketing than actually producing something different.
    KC's View:

    Published on: September 8, 2017

    As noted above, we got a lot of email yesterday about possibilities for Amazon’s second headquarters city.

    One MNB reader wrote:

    Assume they will be looking for a place where young Techies would want to live. That usually means some place with a robust college community and a social life that caters to the young. Amazon’s current HQ employees live state income tax free. Assume a state with a heavy income tax would be a penalty. Since GE fled CT because there is little to offer young tech folks and the tax burden was high ( than even Boston!). So Gov. Malloy should probably not bother. My bet would be the Boston area, North Carolina or the Austin TX area. Austin has the advantage of no state income taxes and a hip/cool/tech reputation. Love to hear other folk’s ideas.

    From another reader:

    I think Columbus, Ohio would be a great choice, many great companies got their start there…Wendy’s, Limited Brands, Cardinal Health to name a few, along with the support of The Ohio State University! Go Bucks!

    And from MNB reader Stan Barrett:

    Would love to see it in Virginia, maybe between Richmond and DC Metro area—one thing to keep in mind, it will have to be affordable, attractive to Millennials, and easy to reach via airport, have solid IT infrastructure in place.

    A few candidates in VA doesn’t meet their needs:

    Chattanooga, TN—major recent investment in IT infrastructure, off major highways—kind of near Nashville (another solid option)  mild climate year-round.

    South Carolina—BMW has changed the face of Greenville, two decent major universities in Clemson and USC.

    Birmingham, AL relatively near ATL, GA another possible candidate.

    Baltimore—majorish metro area, near DC for lobbying, affordable (for now) housing.

    Texas—rebuild Houston, contribute to the already strong IT community in Austin, etc.  Aggressive tax break.

    Bottom line - it will come down to which area throws the most out to Amazon in tax breaks, investment credits.  Sure to be plenty of arguments to not support the richest man in the world, but think “local employees, local homes, local customers” for ancillary businesses. 

    Will be fascinating to watch.

    From another:

    I have to believe that Amazon will be looking for a location that provides a highly educated workforce, younger the better (hey I’m old!), “hip” location desirable to live, good weather, good airport, business friendly, non-union, etc…
    Uhhhh, it just so happens they are already flying in/out of the perfect city for them.  They are understanding this city, it’s workforce, demographics, culture, ease of doing business all while taking control of Whole Foods. Yep, Austin, TX.  Austin has a huge new tollway east of town that they would love to develop QUICKLY.  Amazon would solve the issue.

    MNB reader Tom Murphy wrote:

    Amazon already has a big operation in Vancouver…partially because of immigration constraints in the U.S.  You don’t think Jeff is throwing a dart at the President do you?

    I also got a lot of email responding to my FaceTime commentary about Starbucks dumping its online store, which had the effect of cancelling my monthly subscription to its coffee … which doesn’t make sense to me.

    MNB reader Ron Rash wrote:

    It seems odd to me that a company that built a retail empire using a siren’s allure to bring the public to its ambience and sweet coffee drinks and free WiFI, would be so heavy handed as to try to force you to go to their store to purchase your coffee. That, or buy elsewhere on-line, or (gasp) change brands.

    From another reader:

    I am with you…bad strategy, bad customer experience!  Period!

    MNB reader Steve Rash wrote:

    I just finished watching today’s FaceTime.  If I were in the coffee business you’d be receiving two pounds of coffee from me tomorrow, along with a link to my site so you can set up a subscription.    The universe is sending you a message.  Maybe it’s time for a change.  Peet’s and Stumptown are way better than Starbucks.

    MNB reader Mark Johnson wrote:

    Regarding Starbucks shutting down their online store and suggesting you patronize other retailers.  I think you still have a wide-open opportunity to continue your loyal Starbucks purchases (including subscription) through any grocery storefront including online grocers.  In fact, it’s entirely possible that those very online grocers (first letter A and first letter W) may have had a hand in pressuring Starbucks to close their online commerce…..hmmmmmm.

    Finally, I got the following email responding to a piece I wrote yesterday to answer observations one reader made about the decision to end the DACA program…

    Thanks for the logical, sane comments on the immigration thing. Free pass? Those kids or their parents for that matter don’t get  free money (plenty of freeloaders born here!). Another thing overlooked is that the assumption is all of the “DACA” kids are via  Mexico from south of the border. Don’t know the % but some are from Europe, Middle East, etc.

    Curiously, Trump went out of his way to say most are not “kids” but adults and young adults. But when Don Jr. got into the meeting trouble, he is a good “kid”- almost 40 by the way.

    KC's View:

    Published on: September 8, 2017

    • It was the opening of the National Football League season last night, and the Kansas City Chiefs celebrated it with a 42-27 victory over the New England Patriots - a team that some analysts thought could go undefeated.
    KC's View:

    Published on: September 8, 2017

    I vividly remember the first time I sawClose Encounters of the Third Kind. It was 40 years ago, and I was at the Ziegfeld Theater on the west side of Manhattan (the same place where I saw Apocalypse Now when it first opened - a different but equally memorable and transformative experience).

    I’ve been thinking about that this week because Close Encounters was back in movie theaters for a one-week run to celebrate its 40th anniversary, complete with a bonus feature with writer/director Steven Spielberg talking about the making of the film.

    I’ve seen the movie several times since on television, but nothing could replicate the experience of seeing it on an enormous screen, with a great sound system - Close Encounters is a film that paints its universe of ideas in bold colors, and it requires a big screen. Which is why my eldest son, David, and I went to see it in a theater this week - he's a huge movie buff, and he’d never seen it on a big screen. And I wanted to share it with him.

    (David always has loved movies and theater, and we’ve seen hundreds of movies and dozens of plays together over the years. He’s 31 now, and lives in Chicago, but he was home for Labor Day weekend and we grabbed the opportunity.)

    Close Encounters is a film that mostly has aged well, because the themes it explores are as resonant today as they were four decades ago. Maybe more so. It is a movie about belief, and we live in a time when polls show that people have less faith in institutions than ever. Not that Close Encounters is reassuring on this score, since it portrays authoritarian institutions that want to control what its people know and think about extraterrestrial life. But it also shows us people who break free of the boundaries that these institutions want to place around them, who are driven not just by a desire for knowledge, but a yearning for truth.

    Richard Dreyfuss is a marvel as Roy Neary, a bundle of neurotic energy who knows that the truth is out there (to borrow a phrase from another popular cultural artifact about extraterrestrial life) and is desperate and driven by visions to uncover it, even abandoning his wife and kids to do so. (This made me a little more uncomfortable to watch this time around, but then again, Spielberg has said that if he were making the movie today, he probably would make some different artistic choices. We all get older, and sometimes even wiser.)

    Dreyfuss is never better than when he demands of Francois Truffaut, playing a scientist, “Who are you people?” (It also may be that I have a bias towards short, chubby, bearded, bespectacled, urban-leaning protagonists who tend to have smart mouths that get them in trouble. Not sure why.) Truffaut also is great, as are Melinda Dillon, Teri Garr, Bob Balaban, and, of course, Cary Guffey as Barry, the small child who has a unique bond to the alien visitors. The music by John Williams isn’t just irreplaceable, but a character in the plot.

    There is one way in which Close Encounters is terribly anachronistic - in portraying the scientists who lead the search for alien life on earth, it makes them almost all white, middle aged men. Almost no women, no people of color, no Asians or Hispanics. It is, in fact, truthful to the facts of how the world was just 40 years ago … the fact that it seems so noticeable now stands as some sort of progress, I guess.

    But that doesn’t change the fact that Close Encounters of the Third Kind is a masterpiece of moviemaking - its DNA is entirely and embracingly cinematic - that manages to be thoughtful and entertaining at the same time. While some people in the movie are shown to be afraid of the truth, or in denial of what they do not know and cannot understand, Spielberg’s Close Encounters suggests that we should not be fearful, and that open arms and hearts are far superior to closed minds and clenched fists.

    That's it for this week. Have a great weekend, and I'll see you Monday.

    KC's View: