Back when I was a public company auditor (yes, you read that correctly), I quickly realized after discussing business with top-level executives that few were prepared to meet the challenges that (at that time) seemed unlikely to affect us again. They believed that the economy would continue its rapid expansion, consumer spending would rise by staggering amounts each year, and we would all profit greatly.
But over the past few months, the walls have started closing in and we find ourselves in a recession. Notice I didn't say "historic recession" or "calamitous recession", but simply, "recession"? It's because a recession, by its very nature, is open to interpretation. There is absolutely no proof to show that this recession will be as bad as the Great Depression even though some news stories like to throw that in. Even though times are tough and uncertainty in the market is rampant, companies need to remember that a recession is only as bad as they make it out to be.
The Consumer Electronics Association announced Thursday that it has revised electronics revenue forecasts down for next year after witnessing sales that were on par with last year. Growth is expected to be 0.1 percent--3.6 percentage points lower than it originally forecast.
I'm sure that figure spreads fear through the industry and companies will look at an expected drop in sales as an event that could destroy the market. But instead of fearing what may come, companies should capitalize on this time and allow others to fear for the worst, while they use that as an opportunity.
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The 50-inch 1080p Panasonic Viera TH-50PZ800U can be ordered from Amazon for just $1,881.
(Credit: Amazon)I normally don't shop on Black Friday, but this year I'm making an exception.
No, it's not because I'm moving into new digs and I need to furnish the place with shiny, new tech (I do), or that I'm addicted to buying tech goodies (I am). Instead, I'm shopping this Black Friday for two main reasons: prices are much lower than they were last Black Friday and--call me a patriot or a fool--I want to do what I can to help businesses and the economy.
Prices this year are outstanding. A 32-inch Sony LCD HDTV can be picked up at Circuit City for just $499, and the beautiful 50-inch 1080p Panasonic Viera TH-50PZ800U can be ordered from Amazon for just $1,881. Some of the low-end GPS models from TomTom and others can be purchased for under $100 this year and notebooks from HP, Dell, and even Apple are discounted Friday.
I can't remember any other year in recent memory where so many high-quality products could be purchased at such discounted prices. GPS devices for under $100? A high-end Panasonic plasma for under $2,000? A Sony LCD for just $499? Are you kidding me?
This year, it's too tough to pass up.
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In a not-so-stunning announcement last night, Blockbuster announced that it has withdrawn its bid for Circuit City due to concerns over the viability of the big box retailer.
"Based on market conditions and the completion of our initial due diligence process, we have determined that it is not in the best interest of Blockbuster's shareholders to proceed with an acquisition of Circuit City," said Jim Keyes, Blockbuster Chairman and CEO. "We continue to believe in the strategic merits of a consumer retail proposition that would bring media content and electronic devices together under one brand. We will pursue this strategy through our Blockbuster stores as a way to diversify the business and better serve the entertainment retail segment."
Ever since this deal was announced, I've said it would never happen and was one of the few that said it wasn't worth the trouble. First off, Blockbuster didn't even have the funds to acquire Circuit City, and secondly, I simply didn't understand why a company with its own financial woes would want to be involved with another facing extreme pressure.
Evidently the shareholders agreed with my evaluation. Even though Blockbuster offered $6 per share -- a 54 percent premium -- Circuit City stock hasn't seen $6 since December of last year. In other words, no one was excited about this deal and they quickly realized that Blockbuster was bidding far too much for a company that's worth far too little.
But what happens next for these companies? Will Blockbuster try something new? Will Circuit City be swallowed up by a different company?
Here's what I think:
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Big 4 or CNET?
(Credit: CNET)For those of you who are unaware of my history, I used to work at an unnamed Big 4 auditor before I made my move to writing. Back then, my life was one big blur of hard work, mental exercise and boredom.
My whole life I enjoyed technology and the world of gadgets, but I never seemed to have an outlet to express it. So, with quite a bit of luck, I was able to start in this business as a volunteer writer who wrote feature length articles that were assigned to me. From there, I was offered a position with Ziff-Davis as a part-time blogger, and then parlayed that experience into more writing gigs. Today, I'm lucky enough to be a tech journalist who spews his beliefs to people like you every day. And while I understand that you sometimes disagree with my opinion on a given subject, I respect your belief and welcome any retort you may set forth. Trust me, I have learned over the past few years that no one can be right about this business all the time, but if you love what you do and truly believe what you say, you'll never lose sight of the truth.
But with over 15 publications currently asking me to express my opinion or write up features on a daily, weekly or monthly basis, I commonly find myself reverting back to the days as "big bad auditor Don." When I was an auditor, I knew business inside and out and was lucky enough to see how CEOs, CFOs and the rest run a successful operation. But what always struck me was how different tech companies are from every other industry.
Tech companies are typically run by visionaries or young people that were the original creators of the product or service. And while other businesses have the same kind of operation, it always seemed that tech companies were different -- until they became too big.
Small tech companies don't have employees wear suits to work each day and more often than not, the employees will roam around the halls with a tee-shirt ans jeans on. Working for a tech company seemed fun, appealing, and more often than not, relatively laid back -- nothing like my job as an auditor.
Knowing business is important in tech writing. I'm a firm believer that if you don't know business, you simply don't know technology. Everything that guides these products from R&D to our store shelves is governed by the business world. If the execs think a product will succeed based on countless days of research and market analysis, you'll see it. If, after research is complete, those same execs believe a product isn't suitable for the market they are targeting, it'll die on the vine.
Sometimes, products slip through the cracks and perform poorly because of issues that were either unforeseen or ignored. Other times, expected junkers become hits because they fill a void in a market. Either way, this business is unique.
Try to find me another industry that's as unique as the tech industry. How many different sites are able to update news every single day with at least thirty or forty stories? More often than not, people read these stories because they share the same love for tech that I, and the rest of the journalists in my field share.
That said, we must never lose sight of the fact that business dictates this business and the dollar sign will trump all. Sometimes companies are wrong and other times right, but we're lucky enough to live in a world where the majority of technology products fall under the "good" category.
If you've been following the technology business for any extended amount of time, you would know that Apple has gone missing in the business world. If you look back at the nineties, Apple computers were not only few and far between, most IT managers would cringe at the site of an employee bringing an Apple product in-house.
But in just a few short years, Apple has made some significant headway in the business world and has done so without doing anything. Take a look back at the latest releases from Apple and you won't find a product designed for businesses. And yet, Apple's market share in small-to-midsized businesses has increased dramatically. For the first time, we are witnessing something that has no explanation or historical precursors. For the first time, a company is gaining market share without doing a thing.
According to AMI Partners in a report filed in July, Apple's desktop market share in the medium business segment (100-999 employees) soared from 13% to a whopping 27% in just one year, while its notebook segment commands 18% market share in the same segment. In small enterprises (1-99 employees), Apple's desktop and notebook market share raised to 12% and 8%, respectively.
These numbers reflect Apple market share growth since 2006. Am I missing something here? Did Apple release business products that somehow escaped my grasp? And when did Apple products become so appealing to businesses? Isn't XP or Vista the proven leader in the industry? Not anymore.
Businesses have finally awoken to the fact that there are other solutions in the wild that may be able to solve the same issues (if not more) than the current product. And while I understand some of these businesses could be design and media companies, there is no indication that these numbers reflect the (mostly erroneous) argument that Max OS X is not suitable for the corporate world.
Apple has successfully created a new, profitable market segment for itself by simply creating products that make us go "wow". The company didn't create an enterprise-ready desktop or laptop and it certainly didn't offer a product that is aimed at the IT manager in all of us. Instead, it reversed the Dell formula that worked so well.
Back in the nineties, in an effort to increase consumer sales after poor revenue gains from retail store outlets, Dell realized that its best hope was to appeal to businesses. It figured that if a business adopted Dell computers, its employees would as well. It worked.
Apple on the other hand, created products that appealed to our senses with great designs and zippy speeds. It inched its way into our lives with computers, digital audio players and now cell phones. It created a successful ad campaign that put it back on the map and it appealed to those people who were tired of BSODs and spyware infestations. Apple appealed to the consumer in all of us because it realized that CTOs and IT managers are consumers too. And if those people realized the benefits of owning a Mac, surely they would install the company's machines into their businesses. It worked.
In an incredibly short amount of time, Apple has successfully put Microsoft on notice and made inroads into the business world without really trying. In just a few short years, Dell and HP computers have been replaced with that familiar Apple logo. And while Apple currently reaps the benefit of business-to-business sales, the real question now is where should it go next? Should it appeal to businesses and make a business-friendly device? Absolutely not.
There is no reason for Apple to create computers for businesses. Why should it? We've already found that it's doing extremely well without creating a business product, why should it start now? If historical figures are any indication of future market share potential, Apple is looking at a 50% ownership of SMB computer use by the end of the decade. Not too shabby for a company that doesn't pay too much attention to the sector.
If we have learned nothing else from Apple over the past decade, we have learned that it knows how to appeal to the consumer. And by appealing to the consumer in such an efficient way, the company has silently begun its domination of the work environment. But because people try to downplay Apple's strides in that sector, most still believe that an iMac or MacBookPro are incapable of providing the same benefits of a Dell or Lenovo machine. Simply put, that argument is pure rubbish.
The wait is over and its time we open our eyes -- Apple is a significant player in business and nothing (or no one) will change that.
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