The Knowledge Economy and Tax Breaks

It used to be that tax breaks were used to encourage foreign investment and so help job creation. According to the various anti-globalisation tracts like No Logo, it is used by manufacturing companies such as Ford and Nike to transfer the social cost of manufacturing on to a country whilst little to enrich their employees. Business and money flows around the world to maximise these tax loopholes.

It seems that Microsoft and Google have been taking advantage of Ireland's low corporate tax threshold as a tax avoidance technique for their European operations. On the back of this Ireland has developed an 'industry' based around providing treasury functions to large businesses and financial institutions. The Irish Emigrant as more here.

Ireland has had a relatively successful history in using tax as a driver of economic growth. Coming from third-world status to first world status in my life time.

Over at Slate the Hollywood Economist column highlights how the big US studios used German tax breaks designed to promote the German culture. The tax breaks had been used by the Hollywood studios to further tighten their grip on the German film market and provided no discernable benefit in terms of German jobs, enriching German culture or economic activity.

New Line Cinema and Paramount's conduct is described in as distasteful a way as to put them in the primordial swamp of bad corporate citizenship usually inhabited by the tabacco, mining, oil companies and Nike.

Seems like Germany could learn a thing or two from China in dealing with foreign intellectual property rights.

Maharishi Sale

Maharishi Sale
Originally uploaded by renaissancechambara.

Expensive streetwear brand Maharishi have a sale in Brick Lane next week.

Scuttling the Pirate Ship

I have just come back from a dinner with some former colleagues to celebrate the end of an era. One of the former agencies that I worked at is winding up at the end of the month.

We took the time to remember clients, work done and the small dramas that made up our time working together. Photos from the wake can be found here.

3Com gets nostalgic for the old days

I had the pleasure of cutting my teeth on 3Com when I moved career to PR in the late 1990s. I remember how it rebranded with the rings logo (that I still don't get) and shed parts of its business like a serpent shedding its skin.

I worked on Palm and CommWorks to name but two of the brands. Unfortunately the company had some problems despite its innovation in consumer networking and PDAs.

3Com was a technology conglomerate, not a technology company; while Cisco prided itself on the speed of assimilating newly acquired companies into the firm, within 48 days of purchase. 3Com on the other hand often competed against itself rather than the hypercompetitive Cisco.

A couple of cases in point, Audrey the internet appliance used an OS from QNX, rather than the PalmOS and despite being a technology licencee and shareholder in TopLayer Networks decided to acquire TippingPoint instead.

The world has moved on, the Chinese are building good core network technology and Cisco is moving to higher value software; 3Com is very much the junior partner with Huawei. PR Week has news of 3Com looking to rebrand yet again and try to reclaim its challenger status in the corporate IT marketplace. I hope that they will be successful, but fear that they won't.

Miscellaneous modern culture artifacts

Recycling the past seems to be the big news in dance music at the moment. A series of Todd Terry classics have been re-released, my recommendation is the remix of The Texican on the flipside of Orange Lemon's Dreams of Santa Ana.

E2 E4 by Manuel Goettsching was a 6o minute piece of modern composition that got cult status from the early house and Ibiza DJs who threw everything in the mix if it worked; Prins Thomas captures the essence of it so that you don't have to hunt down a rare as rocking horse sh!t original copy and then sit through a mindnumbing 28 minutes a side.

Pink Floyd's Welcome To The Machine gets turned from pretentious rock meister werk to dancefloor monster by the Dirty Funkers with the help of a fistful of acid sounds and a 909 kick-drum. Pete Heller's Timewarp sounds familar but at the same time is new, go for the dub mix.

A couple of classics from Zoo magazine, first up their tips for modern living: how to fold a t-shirt shop assistant style and tips on getting the most out of your order at Subway - by saying the name of each ingredient with the air of finality as if it is the last ingredient that you will ask for so that the server will pile plenty of stuff on.

Living parody Tim 'Holla' Westwood's Pimp My Bride column in Zoo had me rolling around the supermarket aisle of Budgens laughing at his reviews of reader submitted snaps of young ladies and his agony aunt column. Just to give you a flava (sic) here's a quote from the Westwood translator at the bottom of the page

• "Gorilla pimpin' (noun) A display of bestial or atavistic sexual aggression, most commonly directed towards a 'shorty'"
• "Shorty (noun) Desired female sexual partner. Contrary to the epithet's connotations, she need not be deminitive in stature"

Just what we need: a middle-aged son of an anglican bishop being a role model for young chavs to smack their b*tch up.

This advice seems to run contrary to Tim wearing his agony aunt hat:
"Being drunk is some dumb sh!t. To get a girl you've got to have some game, some swagger, some bounce. Get your flow on, do you, be yourself - that's all you need. What you scared of - failing? So what? What have you got to lose? At least you tried and you won't torment yourself and be thinking about it next day. If there's a girl you like, go kick it with her. And if she disses you , you're better off without that b*tch. Just be respectful, confident and kick your game."

Information Economy

Though its a 'watching the pennies' article, How to tame an inflated entertainment budget by Damon Darlin in the New York Times provides a good insight into how much of consumer spending is now absorbed by the information economy. This outstrips groceries, heating, electricity, healthcare and clothing. Old fashioned live events like the opera and a pop concert cost an eye watering 50 cents and $1.25 per minute of entertainment.

I thought that the AOL venture into TV on the web was a very interesting concept. It looks like it is closer to Robert Cringely's idea of where iTunes was going than the video iPod service that eventually arrived.

Besides the fact that I am very excited about the possiblity of being able to watch re-runs of I Love Lucy, The Honeymooners and Phil Silvers I am curious about a number of items that came out of the announcement.

• Firstly, AOL is using P2P networks to reduce infrastructure costs (network, caching, storage) - yet the big technology thinkers are assuming that storage costs are increasingly tending towards zero, last mile connectivity pricing is deflationary as is core network bandwidth. In fact core network bandwidth deflation put many equipment companies like Corning, Lucent, Nortel and Ericsson on the critical list and was the death of many alternative telecoms providers in the late 1990s and early naughties.
• How does this impact the value that the Time Warner board put on their existing cable network and infrastructure?
• Whilst the channel of market may have changed, the business model assumes that consumption behaviour will have stayed the same. The very people who this service is aimed at consume the media in a different manner to the way that previous television audiences have. As I am writing this blog posting, I have a DVD on and an icon in the righthand corner of my screen warns me when new emails and instant messages come in.
• What are the security risks involved with putting content out in this way and how will AOL counteract hackers and crackers?
• Will this mean the end of regionalisation of content marketing that is a pain-in-the-ass for consumers?
  

Looking at the dark underbelly of the information economy Rolling Stone magazine have an interesting article (The man who sold the war by James Bamford) on John Walter Rendon and the Rendon Group's involvement in the road to the Iraq war. Not surprisingly the company has a rebuttal to the article here.

Finally, Geektronica has an interesting collection of unrelated facts that may or may not be useful in staging a web mob assault against the web property of an extreme American group.

Generation Y Finds A New Marketing Voice – Gen Y!

A design and marketing company called 3iYing has enlisted the help of 15 – 25 year old girls to help develop more effective marketing strategies.

Earlier this year a group of 8 young women enlisted by 3iYing walked into the Virgin Mobile office and told them their teen marketing strategy was all wrong. The girls pointed out that pay-as-you-go tariffs cost too much for teen girls who usually resort to using ‘guilt-tactics’ on their parents to get them to pay.

Virgin listened and subsequently ran a campaign in CosmoGIRL that included tear out phones that allowed teens to make fake calls in front of their parents, thereby pushing their ‘guilt button’. 3iYing’s Chief Executive Heidi Dangelmaier came up with this approach having been a leading voice in girl market trends. The teen demographic has increased by 17 per cent over the last 10 years, Moreover the financial muscle of these teens in terms of home spending is growing even faster.

Companies like Virgin, realising they cannot properly relate to this market are turning to alternative approaches like that offered by 3iYing. User-centred design and marketing has always proved a successful approach, listening to what teens really want will make for more compelling, teen-centric brands and products. Kudos to Steve.

Update: USA Today has an article about Gen Y in the workplace, basically they want a dot.com style work environment with a decent pension plan. Sounds similar to Gen X really, apart from the fact they are more mouthy and high maintenance. Kudos to Blake Barbera.

Analysis from around the web

Forrester Research has some interesting video and audio sessions attached to its IT First Look (November 9, 2005) - subscription required. Forrester's work is interesting because it touches on how technology and web companies are failing in their marketing communications with consumers. How they understand how build the stuff but do not understand how the consumers really use and adopt it.

Thanks to Ian Wood who pointed out an interesting thought piece and associated research by management consultants AT Kearney. Some interesting data in there which I haven't had a full chance to check out but two points immediately leapt out:

• Western European survey respondents were less interested in downloading music on to their mobile phones than their counterparts in Asia, The US and Russia. This and a flatlining of online music sales in the US since May this year indicates that the post-iPod age may be upon us
• Interactive entertainment like games was less popular and did not have as much repeat demand as other mobile services. Interactivity is something that tech advocates bleat on about since before the arrival of the CD-ROM, but it fails to take account of the different types of people and the various ways that they like get and work with information.
  

And finally, the FT devoted much of its magazine over the weekend to mobility and its impact on society. The main article by Richard Waters, their US technology correspondent can be read here. What is really interesting is the way people have absorbed mobility into their cultures, rather a brave new world occurring like all the tech-mavens like to crow about.

Shops4U

Cauldwell Holdings, owner of Phones4U is being sold by its founder John Cauldwell in order so that he can send time sailing around the world in a giant yacht. Fair play.

Cauldwell denies that the sale is due to increased competition in the marketplace. See Fortune4U as Cauldwell puts phone empire up for sale by Damian Reece, The Independent (November, 10 2005) registration/subscription required.

Mobile phone shops were originally formed because Vodafone and BT Cellnet (02) had to have intermedaries called airtime providers in between them and the customers. This was designed by the regulators as an artificial mechanism in order to try and spur competition in the sector and provide better value for the customer. However, now all the carriers have their own airtime reseller operations or direct client billing relationships and an online and offline retail presence. So carriers have less incentive to offer signing on fees to get new customers.

Although the group enjoyed 30 per cent growth last year is Cauldwell getting out as the industry turns from growth to value?

The UK has over 80 per cent mobile penetration and many people I know now have two handsets and accounts. Growth will come from upgrades, which is something carriers are getting stingy about. I had to get my latest handset SIM free as Orange claimed that they were constantly out of stock. Orange's competitors such as Vodafone are looking to lengthen the upgrade paths with 18-month contracts up from 12-months, probably with a view to having a similar upgrade time of two years like its sister carrier Verizon.

This means that phone shops will have less carrier subsidies, which makes up the bulk of their money. And since I was buying my handset SIM-free I sourced it from a supplier that does not sell mobile phone contracts in order to get the cheapest handset price. Thus, the shops have increased competition from the IT sales sector on handsets sales.

Carphone Warehouse has tried to expand into the notoriously difficult voice market with its TalkTalk service. All of this empirical evidence tends to suggest that Phones4U is now a value play rather than being able to enjoy the same kind of stellar growth into the future.

Cool Japanese candy packaging

melon candy
Originally uploaded by renaissancechambara.

Hypercolour

When I was a teenager just before the whole rave thing really took off some of the sportswear shops in my home town of Birkenhead stocked a range of surf wear: Think Pink, Ocean Pacific as the 'No Fear' or Oxbow of their day. The brand that stood out the most was Global Hypercolor. Global Hypercolour was fabric specially died with a heat reactive pigment, giving a kind of dynamic tie-die effect.

The pigment lost its properties over time and the fabric had the unfortunate side effect of showing just how warm you were at a rave, club, blues, shebeen or warehouse. Not surprisingly they died out in the early 1990s. Now a company called Bodyfade is trying to resurrect the concept.

Over on the Wired gadget blog, some people have put thermochromic technologies to better use, putting colour changing lids on a coffee cup. You have a 'smart lid' that give a visual warning of when people are likely to scald themselves with a sip of hot java. Its one of them them duh why 'didn't I think of that' idea When I worked for a looooooong six weeks as a crew member at a McDonalds drive thru, scalding coffee was a major concern and there was a legal disclaimer on the side of every cup. Could a smart lawyer prove that McDonalds had a duty of care to go with these new lids? If so they could be as big a money spinner as Tetrapak cartons.

Generation Wireless

A number of interesting things that have landed in the inbox here at Chez RC:

From Forrester's First look at contents's new value

• Young consumers are connecting socially in record numbers via broadband, mobile phones, and IM. And technology is reaching young consumers: 95% of online 12-to 21-year-olds have or use one of the three. Still, Generation Y prefers in-person conversation for most communication scenarios
• Advergames - Forrester's way of describing the way computer and console games have become legitimate formats for advertisers to address hard-to-target groups in the post-television age. It is being used to fulfil four objectives: reaching a mainstream audience, creating brand awareness, strengthening customer relationships and moving the relationship towards customer evangelisation
• Wi-Fi hotspots have increased by 145 per cent over the past two years in the US

In Business Week's Wireless Report email Matthew Maier talks about how Microsoft Windows Mobile 5 has shown a turnaround in the beast from Redmond's wireless fortunes with earnings growning 50 per cent year-on-year to 75 million USD and losses being cut to 2 million USD from 29 million USD the previous year.

Like a malignant tumour on the mobile phone industry, Windows Mobile is now used by 36 different handset manufacturers and sold 5 million units this year (in comparison Symbian handsets shipped 21 million units to September).

Marketwatch.com have a couple of news stories of interest:

The market for online music has apparently plateau-ed at 6.6 million songs per month in the US and CD sales are heading for the floor like a Stuka bomber with a fuselage full of flak. Record companies are afraid (but when will shareholders wake up to the fact that the record companies have been mismanaging their businesses for years?) "Digital optimism seems to be crashing down on itself," said Simon Baker, a media analyst with SG Securities in London. "Downloads in the U.S. have alarmingly plateaued, this has devastating implications."

Pew Internet Survey found that teenagers like to blog and download stuff. Blogging is a form of self expression, building relationships and carving their own online presence and that the kids have no problem with people looking at their photos, stories and poetry online. More here.

Pump up the Brand

Given that Technotronic and Ya Kid K's bubblegum pop 'Pump up the Jam' has resurfaced in a mildly remixed form the title of this posting seemed appropriate.

Lynx, the male fragance brand owned by Unilever has tried to leverage itself up from the primordial swamp of personal care products stocked in supermarkets with an interesting promotion. The marketers at Unilever have struck a deal with uber-trendy boutique Oki-Ni to make a personal fragrance for shoppers. All for the princely sum of 100GBP.

This includes a conical flask of your own perfume, a lab stand and bracket co-branded Lynx and Oki-Ni and a trendy vinyl figurine to stand next to the cinema display on the Mac at your office.

Where this gets really interesting is the deal that Unilever did in May to 'divest itself of non-core interests' such as Calvin Klein perfumes and yet is now trying to build the Lynx brand up. In addition, Lynx is actually known by other names in other countries like the US were it is called Axe (don't ask us why).

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Mobile Game Shift

Microsoft finally woke up to the fact that the net has finally grown into the computer and moved its game (extend, embrace and extinguish the competition). Meanwhile, high school girls from Allgeheny county in Pennsylvania complained about sexist Abercrombie & Finch t-shirts. Though by the looks of it, I have my suspicions that the group of PC teens could be not-too-subtle viral marketing campaign by Abercrombie & Finch?

These stories overshadowed news from Barcelona where Nokia unveiled a brace of products at its Mobility Conference (I think that's PR speak for media jamboree and extended press launch). I won't discuss the network side of things, but there was two consumer orientated products that really impressed me. First up was a new web browser for the Series 60 flavour of Symbian OS. Where it really gets really clever is that the browser offers two views: one is your conventional mobile web browser, the other is a 'map' that shows where about on the web page the image in the browser is from. Its one of them ideas that seems so elementary you wonder why nobody thought of it before.

In terms of product design Nokia seems to have got its mojo back. The Nokia N92 handset seems like a really interesting piece of kit. The two pictures courtesy of Nokia that I have posted give two views of the same handset. Through clever design Nokia has managed to have a clam phone effortlessly hinge in two ways. Into the small package Nokia has squeezed a DVB-H digital receiver and a fully functioning smart phone with a camera.

It is also of interest that Nokia is looking to sell Bose noise cancelling headsets with the phone rather like what Motorola did in association with the Carphone Warehouse earlier this year. Someone needs to tell some of the phone manufacturers that Sennheiser make top notch noise cancelling headsets that also fold away to fit inside a suit jacket pocket without ruining the cut.

Absolut Marketing

One of the things that surprised me about the way in which the PSP was launched and marketed was that it did not play to Sony's Japanese roots.

The launch instead was bland. They launched a product not a cultural phenomena with a brand personality like the iPod or the original PlayStation.

The Absolut Metropolis campaign just gives an glimpse of what Sony could have, but failed to achieve.

Whilst the Sony has good engineers its marketers have proven themselves to be third-rate. This combined with a patchy developer relations programme will be the death of Sony in the gaming industry yet.

By the numbers

Michael Moe of ThinkEquity Partners has put together some interesting US statistics on the business of public holidays at AlwaysOn Network (registration required).

Especially interesting is the level of adult participation estimated to be at 30 per cent, with the number climbing to 50 per cent for the 16 - 24 year-old age band.

The most popular costume for children is a princess outfit, which outnumbers more traditional ghosts and ghouls by 2-to-1. Adults on the other hand take their cues from horror movies: a case of life imitating art.

Halloween is the sixth largest holiday by spending in the US:

1. Winter holidays (Christmas, Hanukkah) 435 billion USD
2. Valentines Day 13.2 billion USD
3. Mothers Day 11.4 billion USD
4. Easter 9.6 billion USD
5. Fathers Day 8.2 billion USD
6. Halloween 3.3 billion USD