Friday, August 26, 2011

Fed chairman tells audience at resort to fear not, all is well

The chairman of the Federal Reserve, Ben Bernanke, told an audience at a resort in Jackson Hole, Wyoming that his was "optimistic" about the economy, and that any policies that could be implemented to "support robust economic growth" were "outside the province of the central bank."
Bernanke: "There have been some positive developments over the past few years, particularly when considered in the light of economic prospects as viewed at the depth of the crisis. Overall, the global economy has seen significant growth, led by the emerging-market economies."

Reuters: "U.S. economic growth in the second quarter was slower than previously thought and consumer confidence sank in August, further reducing prospects of a strong pick-up in output in the second half of the year."

Bernanke: "The negotiations that took place over the summer disrupted financial markets and probably the economy as well, and similar events in the future could, over time, seriously jeopardize the willingness of investors around the world to hold U.S. financial assets or to make direct investments in job-creating U.S. businesses."

Rick Perry, GOP candidate for President: "If this guy prints more money between now and the election, I don’t know what y’all would do to him in Iowa, but we’d treat him pretty ugly down in Texas... Printing more money, to play politics at this particular time in American history, is almost treacherous, uh, treasonous, in my opinion."

Forbes: "World stocks recover after Bernanke comments"

Well, if Wall Street is happy then everything must be OK, no need to worry your little head about things you can't do anything about.

So off with you, and go enjoy the greatest little recession the Fed, the White House, the Congress, and Wall Street, can create for you.

Thursday, August 25, 2011

What media executives should learn from the success of a Steve Jobs led Apple, and why we will miss him terribly

Excuse the quickly written post, but here are a few thoughts – written on the fly – on the impact of Apple and Steve Jobs. In spots it is embarrassingly superficial, sorry about that. But even now, hours after the announcement, few writers appear eager to talk about what Apple's, and by extension, Job's business strategy relates to the rest of the business world, including media.

Newspapers, tech sites and other media outlets will be recapping the incredibly career of Steve Jobs, who yesterday informed the world that he would be stepping down as CEO of Apple. But while many media outlets will predictably recount the ups and downs of both Jobs and the company he ran, few will really talk about what sets Apple apart from other tech companies and what business lessons are to be learned – especially for the struggling media business.

So here are a few thoughts about Apple and the media, written before the conversation returns to market share ("Android is killing iPhone!") and product rumors ("the iPhone 5 will a separate freezer compartment").

1. User Interface matters
While both newspaper and magazine publishers will talk about the art direction of their publishing products, few have a clue about user interface, it is simply not a term widely used in the media business. Roughly speaking, user interface refers to the way on interacts with the product.

For Apple this often meant ease of use. But ease of use is not the sole concern in user interface. "Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple," Jobs once said.

One could talk all day about user interface and Apple, and how Apple's Macintosh revolutionized computing, as did the iPhone. But think about Apple's approach to user interface, and then think about the decisions being made by publishers. Rarely do design decisions ever involve the way the reader interacts with the product. Instead, as in the recent decision by Gannett to downsize some of its newspaper products, the talk is all about cost savings.

For more than a century the newspaper and magazine business has presented readers their products in the same way, in a comfortable and easily duplicatable form. But with many readers now moving to digital only forms of the media, the time is ripe to rethink the basics of the platform and to begin to understand how modern readers will be using and consuming their new digital products.

2. Sometimes it is better to give the customer less, but do it better
The MacBook Air does not have an optical drive; the iPad does not have a USB port, the Apple TV has not hard drive for storage; the iPhone has no keyboard. I need not repeat the ridiculous columns written about how all these missing components would prevent these products from being a success.

Today's newspapers still contain the same basic elements they have had for many decades now: main news, local news, sports, a lifestyle section, business, classifieds. Many of these sections have essentially withered to a page or two, but killing any of them off would take an act of God.

If Steve Jobs had bought the San Jose Mercury News, instead of MediaNews Group, what would it look like today?

3. Better quality and design will justify a higher price point
Until the iPad was introduced at a low price point of $499, Apple was always known as the top of the market, the company that would charge the most for its products. Do you remember what the first iPhone cost? $599 and $499 for the 8 GB and 4 GB models. It then cut the price down to $399 after a few months in the market, before AT&T started offering a subsidized price.

Today a 15-inch MacBook Pro will still cost you over two grand, while most other laptops can be found for around $500 to a grand. But how many buyers of cheap HP laptops really covet a MacBook Pro?

The problem with the pricing question today is that rarely does the quality component come into play. Newspapers, in particular, have come around to the idea that they can, and should, charge for their products online. But readers are not buying it – they see products that are offering less quality, less depth. That is why those products with good reputations for quality reporting are able to put up paywalls, while everyone else is just putting up a wall.

I truly thought that more publishers would have looked at the introduction of the iPad, and tablets in general, as an opportunity to rethink their products in the digital environment, and to create new ones that would justify charging the customer. Instead we are getting replica editions that duplicate the old print platform

4. Innovate and be the best
I suppose this needs no further narrative.

I have always found it ironic that the tech business, centered in the Bay Area and Silicon Valley, should also be the home for some of the nation's worst newspapers. When an employee at Apple thinks about the media business it would be hard not to equate the entire industry with the kinds of products being put out by MediaNews Group, owner of the San Jose Mercury News. For while there might be some old timers, like Steve Jobs and Steve Wozniak who grew up with the Knight-Ridder Merc, others will only see the shell of a paper now being produced by the slash and burn publishers of today.

The newspaper business today needs a "1984" moment, a rethinking of the way the user interacts with the news product. Yesterday I was watched that keynote address Jobs gave where he played the Chiat-Day commercial for the first time. Those in attendance probably gave the longest applause ever given for a commercial.

One that day Steve Jobs was on top of the world. But only a few years later he was out on the street. The lesson learned by Steve Jobs was that you have to do all the things mentioned above, but you also have to run a business. To do so you need a team around you that the very best and share your vision for the company and the kinds of products you want to product.

While many have written about the attitude sometimes shown by the people at Apple, especially in their interaction with media companies, few would argue that the people at Apple don't share the vision set by Steve Jobs. Now, think about the corporate culture at many media companies. As they say, 'nuf said.

Wednesday, August 24, 2011

Apple announces that Steve Jobs has stepped down as CEO; COO Tim Cook takes over the helm immediately

The news was not totally unexpected, but for many this is shocking, nonetheless: Steve Jobs, who has guided Apple back from the brink to become one of most valuable companies in the world, is stepping down as Apple's Chief Operating Officer.

Apple made the announcement late this afternoon, west coast time. Tim Cook will take over the CEO role effective immediately.

In a letter to Apple's board of directors, Jobs wrote "I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know. Unfortunately, that day has come." He then added "I hereby resign as CEO of Apple."

Here is the full press release from Apple:

CUPERTINO, Calif.--(BUSINESS WIRE)--Apple's Board of Directors today announced that Steve Jobs has resigned as Chief Executive Officer, and the Board has named Tim Cook, previously Apple's Chief Operating Officer, as the company's new CEO. Jobs has been elected Chairman of the Board and Cook will join the Board, effective immediately.

"Tim's 13 years of service to Apple have been marked by outstanding performance, and he has demonstrated remarkable talent and sound judgment in everything he does."

"Steve's extraordinary vision and leadership saved Apple and guided it to its position as the world's most innovative and valuable technology company," said Art Levinson, Chairman of Genentech, on behalf of Apple's Board. "Steve has made countless contributions to Apple's success, and he has attracted and inspired Apple's immensely creative employees and world class executive team. In his new role as Chairman of the Board, Steve will continue to serve Apple with his unique insights, creativity and inspiration."

"The Board has complete confidence that Tim is the right person to be our next CEO," added Levinson. "Tim's 13 years of service to Apple have been marked by outstanding performance, and he has demonstrated remarkable talent and sound judgment in everything he does."

Jobs submitted his resignation to the Board today and strongly recommended that the Board implement its succession plan and name Tim Cook as CEO.

As COO, Cook was previously responsible for all of the company's worldwide sales and operations, including end-to-end management of Apple's supply chain, sales activities, and service and support in all markets and countries. He also headed Apple's Macintosh division and played a key role in the continued development of strategic reseller and supplier relationships, ensuring flexibility in response to an increasingly demanding marketplace.

MediaNews Group consolidates its Bay Area holdings; Build them up, tear them down: only newspapers demonstrate the ability to destroy their own franchises

For those who worked in the Bay Area newspaper business, yesterday's news that MediaNews Group would take their multiple brand Bay Area newspaper franchise and convert it into a couple of generic regional newspapers was long in coming. One wondered why the company, which never really appreciated the gold mine they were sitting on, hadn't closed down all those newspaper titles long ago.

The details are as expected: The Oakland Tribune and the adjoining papers will become the East Bay Tribune; the Contra Costa Times and papers south into the San Ramon Valley and into eastern Alameda will be called the Times; and the San Mateo County Times will get rolled up into the San Jose Mercury News.

I once worked at one of these newspaper titles – actually a title that, as I will explain more about below, was closed down long ago. I was there when the brands were growing and making millions of dollars of profits for its owner.

It would easy to explain yesterday's news as yet another example of the newspaper business being unable to compete in a new digital world, but the fact is that none of yesterday's news has anything to do with the Internet. That would be too easy an explanation.

Once, long ago, there were two family owned newspaper groups that competed against each on the edges, and competed with big dailies more directly. One chain, owned by Floyd Sparks, controlled that part of the suburban market that touched the bay, east of San Francisco, but just south of Oakland. Another, owned by Dean Lesher, was growing like gangbusters out in Contra Costa County, growing east, north and south as new home and retail was being developed.

The two chains met in the Dublin/Pleasanton/Livermore area - the fringes for both groups, but fertile area due to its high demographics and growing retail base. One paper, The Valley Times, had just gone to seven day delivery – that was the paper that recruited me to move up from Los Angeles.

Each paper had its own approach to publishing, each had its merits, but eventually The Valley Times became the number one paper. Then Dean Singleton came in and bought out the Sparks papers in another move to acquire a family owned chain in order to slice it down to size to maximize profits. Things got even easier for us at The Valley Times – that is until the old man died.

At that point the chain was run by a brown-nosed, charismatic fool who had worked his way up the corporate ladder high enough to take his revenge on anyone who didn't kiss the ring. (I was one of those who wasn't going to kiss the ring, so off to McGraw-Hill for me.)

What happened next, some twenty years ago, and still well before the Internet boom, is what spelled the end to the family of Bay Area newspapers. Through media consolidation the Lesher chain was bought first by McClatchy, then by Singleton's company, MediaNews Group, which owns them all now.

The Valley Times, which had grown to number one and was linked to the more affluent Contra Costa County, was closed down to create a monopoly for the other paper. Staff sizes were reduced, revenue and circulation growth stopped. And then the Internet boom took place.

"We are trying to gain efficiencies through streamlining. A lot of positives are being added: a local section seven days a week, a stand-alone business section every day and the successful technology section from the South Bay being brought up to the East Bay," Mac Tully, president of the Bay Area News Group told the Chronicle yesterday.

It will be nice that the same communities that had their own seven day a week newspaper will now have a seven day a week local news section, huh? (Yeah, that's snark.) And that office that once housed Lesher Communications in Walnut Creek will be closed, effectively vacating the entire county to whoever comes in next.

But wasn't this inevitable? Yes, just like it will be inevitable that New Media companies spring up to feed on the carcass of the Bay Area newspapers. With reduced staff sizes being imposed on already reduced staff sizes, there will be plenty of room for new local digital products.

And while the company says they want to concentrate on its digital offerings, one look at their first iPad effort is enough to convince you that don't really mean it.

Yes it is sad when local communities lose their local newspapers. But the reaction online to this news is either a yawn or an "adios". The reading public wasn't enamored with what had happened to these newspapers under MediaNews Group ownership and so are hardly lamenting their demise. For many readers, what is left of these papers will be simply coupon delivery devices.

Ironically, I think this may truly spur media growth in the Bay Area. Think about what MediaNews has just said: we can not make money in the news business serving some of the nation's wealthiest communities – Silicon Valley including the Palo Alto area, Pleasanton and the rich San Ramon Valley. Give us a gold mine and we will turn it into a dust bowl.