Category: Business

The new issue of Business Week has an article on just how profitable extended warranties on consumer electronics are to the likes of Best Buy, Circuit City, etc. Pretty amazing numbers:

Last year, profits from warranties accounted for all of Circuit City’s operating income and almost half of Best Buy’s, say analysts. They figure that profit margins on contracts are between 50% and 60%. That’s nearly 18 times the margin on the goods themselves. For example, a four-year contract on a $3,000 flat-panel TV costs about $400. Best Buy gives its insurers $160 and keeps $240 for itself.

Some things do take a while.

I can remember a meeting I had in Washington with former FCC Chairman Dick Wiley back in 1989. I asked him what was going to be the ‘next big thing’ in telecommunications, etc. His answer: satellite radio.

Now that Howard Stern and Mel Karmazin have both signed on with Sirius, satellite radio appears to have arrived — fifteen years after my conversation with Wiley and his prediction of it being the next big thing! Even now, Sirius only has 800,000 subscribers.

While in Florida earlier this week, I had an opportunity to hear Ram Chiran speak on the subject of driving profitable growth.

The Economist takes a look at self-service.

In a study commissioned by NCR (a maker of ATMs and other kiosks), IDC, a market-research firm, found that nearly 70% of customers in five different countries said they were willing to use self-check-out. In America, the figure was 78%. That would suit the supermarket chains just fine, since a kiosk can handle the workload of two-and-a-half employees at a fraction of the cost.

Jonathan Zittrain comments on the Google IPO in this morning’s Boston Globe.

Thanks to Google’s desire to align profits with the valuation of the investing public whose imagination and loyalty it has largely captured, a Silicon Valley 6-year-old’s opening roar has rattled Wall Street. But as the IPO’s opening bell fades, the clash between Google’s contradictory egalitarian and elitist impulses are certain to make it a volatile investment as soon as next week, not to mention for years to come.

Over on the Glenbrook website, I recently posted some reflections about PayPal’s recently introduced Buyer Credit offering. Comments welcome here.

Exploring Global Paths is a great article by Lester Thurow in the latest Optimize magazine.

Explorers try many routes before they find one that works. If they were fired or demoted when they tried a route that didn’t work, they would quit looking for new routes. To optimize global competitiveness and vitality, each company should devise its own blend of business systems and companywide incentives to motivate bold performance. Fortune favors the bold.

How bold have I been today?

Susan Fornoff reports in the San Francisco Chronicle on J. Peterman’s latest adventure.

Rumor had it that he found inspiration for a new piece the night before, at an antiques store in Menlo Park, but he’s not telling. “What was it? That’s a trade secret. That’s how I make my living. I can’t tell all my secrets.”

More a www.jpeterman.com.