Google launched Nexus 7 tablet this week targeted at the low end tablet market. The tablet is powered by the NVIDIA Tegra 3 processor can handle most any mobile application. It comes with a 7-inch screen which is bigger than the larget cell phone and smaller than successful tablets. It is also lighter than iPad and is a better solution for field research and form works. The tablet runs Jelly Bean, the latest Android OS in which Google fixed all the major security issues. The OS still uses a Linux kernel which means that it is still at risk. Rob believes that if Google fully addresses all the security problems, it could be a better platform for internal business applications than iOS because Google is largely run by engineers and tends to provide tools that they find more compelling. He feels that the success of the tablet depends on marketing efforts of Google but neither Asus nor Google are known for their “epic” markeing attempts. In the end, the size, price point and performance could drive sales. To read the full article, please visit http://www.itbusinessedge.com/cm/blogs/enderle/nexus-7-could-a-7-inch-tablet-replace-the-ipad-as-favorite-byod/?cs=50706.

 Rob Enderle is President and Principal Analyst of the Enderle Group, a forward looking emerging technology advisory firm. He specializes in providing rapid perspectives and suggested tactics and strategies to a large number of clients dealing with rapidly changing global events.

The introduction of a new air interface with LTE will cause a tremendous increase in the consistent service quality and in mobile broadband availability.  There have been profound advances in the capabilities, economics and availability of network with each generational shift. Cellular soon became economic for mass-market consumer adoption. The result is 6 billion GSM subscriptions for voice and text worldwide today. The addition of 3G since the early 2000’s provided further voice capacity and then, with HSPA, the higher speeds and lower latencies required to stimulate significant mobile broadband use. In the early 2000’s 3G was introduced and provided further voice capacity and then, with HSPA, the higher speeds and lower latencies required to stimulate significant mobile broadband use. 3GPP members and external observers have doubled each year and are set to grow rapidly. Hence there is a pressing need to satisfy massive growth in data traffic. Commentators expect a 15 to 30-fold traffic increase over five years and several expect this growth trend to last a decade to 2020, representing a 250-1,000-fold increase. This huge demand can be tackled by reframing the existing bands for more efficient use.

A lot of technologies are helping increase the amount of data transported per Hz of spectrum used, to reduce latency and increase speeds–with emphasis on average speeds achievable across the entire cell including cell edges. With strong consensus in 3GPP to maintain LTE’s OFDMA air interface in the downlink, some 3G participants favor introducing something similar to improve uplink performance. Improved backhaul, and side hauling via X2 interface will support techniques such as baseband pooling and inter-cell coordination that can most efficiently and effectively orchestrate resources with the large arrays of radio heads that will be deployed in high-demand locations. LTE will provide the primary or only broadband access to billions of people in developing nations where fixed network alternatives are not available. Release 12 will also include various enhancements that will improve spectral efficiency and service quality in UMTS networks using HSPA technologies. To read the full article please visit http://www.fiercewireless.com/europe/story/mallinson-2020-vision-lte/2012-06-20.

Keith Mallinson is founder of WiseHarbor, providing expert commercial advisory to technology and services businesses in wired and wireless telecommunications, media and entertainment serving consumer and professional markets. He is also regular columnist with Wireless Week, FierceWireless Europe, and IP Finance. Prior to forming Wise Harbor Mallinson led Yankee Group’s global Wireless/Mobile research and consulting team as Executive Vice President. He currently forecasts the long-term outlook in mobile operator services, network equipment and devices to 2025.

There has been a lot of talk these days about social media and how companies can use it in their marketing efforts. At our most recent Social Media Roundtable, Brandon Evans, CEO of CrowdTap, and Jeff Marcus, Principal of Sparkway, discussed the trends in marketing and challenges faced by social media companies. Issues that media content producers and cable service providers will be facing because of change in user demographics were discussed at length during the event.

Brandon believes that, in the future social media will be everything and it will get incorporated into websites, TV shows and mobile. He is bullish on Facebook because of the amount of user data and the talent it is attracting. The company can create more value for itself if it could leverage on what it knows about consumers. Though Google is the leader in search, it is not subscription oriented and it has less user information compared to Facebook. However, they are trying to catch up with other social media players by introducing new services which require the user to sign in.

User data can be used for target marketing, which is more powerful and effective than broadcasting on cable. It is becoming easier for small companies to launch products and achieve greater market awareness at lower costs. The pricing data on the other hand shows a diverging trend, the CPM for cable and TV is going higher and the CPM for online advertising is going lower. Jeff explained that this diverging trend is because of limited inventory of TV airtimes and excess inventory of online advertisement space. The current pricing is not real pricing and in future the CPM for TV and the CPM for Internet will converge. Also, the CPM for mobile is 5 times higher than CPM for internet because of location based advertising that can be provided on mobile.

The major challenges that social media companies are facing include privacy regulations by government and the price differential between desktop and mobile ads. For Facebook in particular, the challenge is to find a way to charge other content providers who use Facebook API for using the data on Facebook server and find the right business model for mobile ads. In this regard, both Jeff and Brandon feel Microsoft has a better business model and the advantage of offline presence with products like Xbox and Mobile.

Roulston’s Retail Roundtable on June 19th was fortunate to host Bob Rosenblatt, former COO of Tommy Hilfiger, and Steven Packles, former CFO and SVP of Operations for Macy’s Home Store Division. At the roundtable, both partners weighed in on a variety of topics including JC Penney’s new EDLP strategy, the delicate balance between vendors and discount stores needs, and what “fast fashion” is doing to retailers and supply chains.

 The conversation first started with Bob and Steven giving incite on JC Penney’s operations and how their new company strategy will play out. Both agreed that the departure of Michael Francis was not good and could not be spun off in any positive way. Next, has JC Penney’s tactics undermined their strategy? As Steven said, “It’s always easy to play Monday morning quarterback and say there seems to be some missteps on the tactics.” Steven went on to note that better results may have been achieved had JC Penney made the transition at a more controlled pace. “No one would have complained if they would have taken things a little slower.” This would included informing the public more on what’s going on as well as small test group stores. Both partners also agreed the recent hiring of new senior execs after adopting an EDLP strategy months earlier made it difficult for the team to embrace the evolution of what they are to become rather then being told what they will be doing. The conversation on JC Penney finished with the battle of implementing cost effective strategies while dealing with resistance from legacy vendors. “You’re our partner, you’re part of the transition,” as Bob passionately put it.

The roundtable next turned towards discount retailers. Bob started off by stating that it was a mixed bet for some retailers and then going into more detail. Stores such as TJ Maxx and Ross are doing well unlike Kohl’s who continues to free fall with no rip cord to tug. Bob talked about his previous experiences at Tommy Hilfiger. He clarified the balance needed between brand management and meeting investor cash flow demands. Brands, such as Tommy Hilfiger, sell merchandise created specifically for a store such as TJ Maxx at very low prices (high single digits in some cases). This alternative distribution point (versus Macy’s or Nordstrom’s) creates great margins but can also diminish the brand’s reputation if not closely monitored. Some companies, however, become used to this money source. “Having this is like a drug. A company gets used to having that cash flow, making it harder to turn off the valve later on.” Steven carried on, stating that “off-prices” were here to stay. Consumers will always love brands but are now starting to love bargains just as much.

The conversation made a final transition towards supply chain outlook and where “fast fashion” is making an impact. Bob started out by saying where fast fashion is on rise and how the market is reacting to it. Supply chains are becoming more cost effective as the world becomes more global. “As the world matures, countries are going to become less important, in that, factories and skill sets can be transferred more easily. There will be a learning curve of course but nonetheless, it will be an international market place.” Poster child Forever 21 is currently dominating the fast fashion industry but as their sales and inventories grow, their supporting vendor community has not kept up. This may force them to travel overseas more, creating an overall slowdown of the fast fashion concept.

Other topics covered included the importance of the buyer’s age and comfort level with buying merchandise through Ipads or laptops, and what that means for an online retail giant like Amazon. Also discussed were the distinguishing factors (IT vs. vendor issues) that may explain the increased merchandising margins experienced by stores such as Ross and TJ Maxx. If you are interested in listening to a podcast of the event please email info@roulstonresearch.com.

This week JC Penney’s announced that President Michael Francis would be leaving the department store chain after 8 months on the job. Francis, the former Target executive, was brought in by CEO Ron Johnson to help develop the company’s new marketing and strategic positioning. There was no explanation for his leaving and left people outside the company with more questions than answers. Dick Seesel believes Mr. Francis’s departure raises some deeper questions about the retailer:

1. Is there a serious dysfunction inside the JCP team that has been masked by Ron Johnson’s upbeat presentations at investor meetings?

2. Can the company CEO successfully turn around JCP’s merchandising and marketing by himself, at the same time that he is focused on reinvention of the store experience?

3. For that matter, doesn’t JCP need a separate head of merchandising and head of marketing given the magnitude of the company’s challenges?

This looks like two classic marketing mistakes: First, focusing on re-branding the company image instead of “selling” the pricing policy. And, second, running those image ads before completing the task of reinventing the merchandise content and store experience. To read the full article please visit http://retailinginfocus.wordpress.com/2012/06/21/lessons-from-the-management-shakeup-at-jcp/.

 

Richard Seesel is the Manager and owner of Retailing In Focus, LLC. He was most recently a Senior Vice President and Divisional Merchandise Manager at Kohl’s Department Stores. Dick is proud to have helped Kohl’s grow from 18 stores to a national retail powerhouse, during an era of change and consolidation throughout the retail industry.

A San Francisco portfolio manager likes KAR Auction Services (NYSE: KAR, $15.87).  This provider of vehicle auction services is the second largest player in whole and salvage auctions.  Both industries are dominated by two companies, Manheim and KAR in whole auctions, Copart and KAR in salvage auctions.  High barriers to entry prevent new entrants from posing a credible competitive threat.  KAR has a levered balance sheet, but has been paying down debt, using its strong cash flow.  A significant redulction in leverage is projected for this year.  The stock is valued very attractively on cash flow and EBITDA.  The presenter targets a double from the current level by 2015.

Unconventional gas, particularly shale gas, is having profound economic impacts on creating jobs, reducing consumer costs of natural gas and electricity, stimulating economic growth and bolstering federal, state and local tax revenue. IHS Global Insight recently released a study that found that the unconventional gas industry supports over 1 million jobs today and is expected to support 1.5 million by 2015. It also predicts shale gas will represent 60 percent of total US natural gas production by 2035, up from 27 percent in 2010. If the government allows it the United States may export liquefied natural gas overseas at that time due to its abundance and low prices. Shale gas is booming because technology (hydraulic fracturing and horizontal drilling) has made it economic to produce when previously it was inaccessible because it was trapped in shale rock through which gas would not readily flow. Its abundant supply has forced U.S. natural gas prices to drop below $2 per cubic feet, half of what it was a year ago, making it an affordable fuel for manufacturers, who are moving back some of their operations from overseas. The lower natural gas prices that we are already experiencing from the shale gas boom have resulted in a 10 percent reduction in electricity costs nationally, which leads to lower prices for many other consumer products. With major oil giants like BP and Shell investing billions of dollars into the Marcellus and Utica Shales recently we can expect this to continue moving forward. To read the full article please visit http://www.instituteforenergyresearch.org/2012/06/18/jobs-boom-shale-gas-industry-employment-up-45-percent-by-2015/.

Thomas J. Pyle is the president of the Institute for Energy Research (IER). In this capacity, Pyle brings a unique backdrop of public and private sector experience to help manage IER’s Washington, DC-based staff and operations. He also helps to develop the organization’s free market policy positions and implement education efforts with respect to key energy stakeholders, including policymakers, federal agency representatives, industry leaders, consumer entities and the media. To read more about the Institute for Energy Research and their mission please visit http://www.instituteforenergyresearch.org/.