about Wi-Fi, and I don't say that just because t-Mobile has been less than reliable this morning.
Reader Buzz Bruggeman comments:
The fully loaded cost of offering free Wi-Fi access is less than $6/day. Operating a billable hotspot costs over $30/day. Half this cost comes from building or altering billing systems, plus the endless associated customer care. The millions of dollars already spent on systems to charge Wi-Fi users by the megabyte, minute, etc., will never be recuperated. Next year, authentication should become cheap enough to be part of a profitable Wi-Fi offering, but for the foreseeable future, authorization and accounting remain dangerous distractions.
Come to think of it, I have had to call t-Mobile's customer service number not once but twice in the month or so I've been using the service. Providing that sort of service, which makes up for various bugs in your system, is expensive. (It's also why Amazon takes a bigger cut from Tip Jar contributions than PayPal does.)
Buzz also sends a link to this discussion of Wi-Fi business models. Like Paul Boutin's Wired article, it mentions that Schlotzky's is installing Wi-Fi. Adding to Paul's piece, reader George Columbo notes that "Panera Bread is one chain that is implementing the approach suggested in this piece and I believe they're doing it somewhat successfully." (Here's an industry item, with comments on Panera's service.)
Panera and Schlotzky's are both examples of the fastest growing segment of the restaurant industry: "fast casual," where you don't get waiter service but you do get good, fresh food in an aesthetic environment. (Schlotzky's is currently revamping its stores to bring the environment in line with the food.) Fast casual places make the food fast--good if you're hungry or just have a short break--but, unlike the traditional McDonald's approach, they charge enough to allow those customers who want to to linger. My favorite example is the Texas chain Cafe Express--highly recommended. For reasons that are hard to articulate, Wi-Fi service fits the "fast casual" atmosphere. Somehow it seems so obvious that technology, communication, free-agent employment, and aesthetics go together.
Correction/update: Buzz points out that the quote above, while it was in his email, was from the article he cited.
Posted by Virginia Postrel on August 25, 2003 • Comments
Dallas blogger and D Magazine contributor Dan Michalski calls my attention to this pretty puffy news item on the BBC site. In what looks like an effort to demonstrate the Beeb's dedication to public service, the network is putting its news archives online--good news for historians and other scholars, as well as for the general public and, yes, BBC critics.
Posted by Virginia Postrel on August 25, 2003 • Comments
I'm blogging from a sidewalk table outside the Starbucks in Westwood. Unlike the mighty Instapundit, I'm more than happy to pay t-Mobile $29.95 a month for unlimited access. (Maybe that University of Tennessee Internet access has spoiled him into thinking broadband access naturally comes free.) This way, I don't feel obligated to buy Starbucks coffee or Borders books unless I want to. Since I rarely drink coffee, I'm notorious for using Starbucks' Wi-Fi from adjacent stores that sell beverages (a.k.a. Diet Coke) more to my liking. Also, as a Dallas-based frequent traveler, I belong to the American Airlines Admirals Club, which uses the same t-Mobile system. Rather than hoping lots of businesses will throw in the Wi-Fi free with their products, which I may or may not want to buy, I'd like to see the t-Mobile network expand into more public places. The more it expands, the more I get for my $29.95.
One compromise between my proposal and Glenn's would be for traditional shopping malls, which need to find ways to compete with drive-up shopping centers, to install the t-Mobile network or one of its competitors. Malls these days succeed mostly when they become "third places" rather than "machines for shopping," and Wi-Fi access that doesn't require camping outside Starbucks or The Apple Store would be a lure.
Posted by Virginia Postrel on August 24, 2003 • Comments
Rick Henderson calls my attention to the latest example: more than $1 million worth of damage from arson and vandalism at L.A.-area car dealerships.
Apparent arson fires destroyed or damaged dozens of Hummers and other SUVs early today at a car dealership vandalized by anti-pollution graffiti, and similar slogans were found spray-painted on SUVs at three other dealerships in neighboring cities.
The press office of the radical Earth Liberation Front issued an unsigned e-mail calling the incidents "ELF actions" but adding that it had received no communication from the persons responsible. The ELF claimed responsibility earlier this month for burning down a San Diego apartment construction site....
Investigators found slogans such as "SUVs suck," "I (heart) pollution" and "Fat, Lazy Americans" spray-painted on several Hummers at the dealership. The initials "ELF" were also found....
No comment yet from anti-SUV gubernatorial candidate Arianna Huffington.
Read the whole report.
Posted by Virginia Postrel on August 22, 2003 • Comments
Jeff Taylor shares my view of The Great Indoors and my lack of faith in Sears strategy:
The Great Indoors in Montgomery Co. MD was a wonderous makeover: old, ugly Sears shipping dock transformed into sparkling SubZero and Viking dreamland with a Starbucks up front. The store always seemed packed. But that is a function of the white hot real estate market in the area and the all the cashout re-fis, which is where you get $50K-$100K to spend on a kitchen. This necessary condition for success explains why there was never any hope for 200 Great Indoors outlets, or maybe even 50. Twenty sounds about right.
Home Depot's Design Expo might be a better proxy for the concept, one without Sears' backend problems. Expo's hook is the "custom design" services you get once you agree to spend X thousands of dollars on hardware.
And when will people get that you cannot just try to copy Target's products (Sears Grand?) to get Target's customers? It is (usually) aesthetically pleasing to go to a Target because the floor isn't choked with boxes and junk, and you can actually find what you want without a dozen false starts.
And my favorite strategy professor (whose web page could really use an update) is reassuring:
Any discussion of market trends that refers to particular businesses, especially nascent ones, especially in retailing, is subject to revision as time goes on. It's not like you said The Great Indoors was a model that all businesses should follow. At least it's good news for Expo.
I also note the idiocy expressed in the article that Sears' typical customer isn't interested in fancy housewares. Duh! The whole point of TGI was to tap people who have more money and taste than the typical Sears customer. I also wonder whether tweaking the concept could bring it to profitability.
Also, note that the new hobbyhorse is a Target imitation. As of a few years ago, Target's customers had higher incomes than Sears's. And to emulate Target, they're going to have to do lots of aesthetic things.
As it's likely to be executed by Sears, the "imitate Target" plan will produce a high-priced Wal-Mart. And it's not clear that the market has room for two Targets assuming Sears Grand could figure out how to offer style at a discount.
Posted by Virginia Postrel on August 22, 2003 • Comments
Jesse Walker writes in response to my post below:
If I wasn't completely jumping up & down with glee at Powell's statement, it was for two reasons.
The first is my concern that this will put the brakes on some recent efforts to repeal the anti-LPFM law that was passed in 2000. It's great to expedite approval of all those licenses that are currently in limbo, but it would be even better to grant licenses to people in, y'know, cities. (Then again, there's no guarantee that such a law will pass -- and if it does, it'll almost certainly be attached to an effort to restore the status quo ante with the ownership regs.)
The second reason was alluded to briefly in the Times piece: "Mr. Powell said that the panel, which will begin meeting next month, would seek to answer such questions as how many hours stations already devote to local issues and 'what was the nature and the quality of that local news,' with a goal of increasing such coverage." That could mean a lot of things, and I'm taking a wait-and-see attitude for now. But I'm worried that it might end up bringing back the sorts of regulations that were scaled back in the '80s, requiring a certain amount of "public service" programming to keep your license.
He also notes that I used an obsolete title for his book. It's Rebels on the Air, not in it. (Rebels in the Air is to Rebels on the Air as Look and Feel is to The Substance of Style.)
Posted by Virginia Postrel on August 22, 2003 • Comments
I love the way FCC chairman Michael Powell has decided to pretend that critics of relaxing ownership restrictions are genuinely concerned about "localism"--rather than commercialism (a.k.a. radio with ratings), effective competition, or formats (and politics) they don't like. Want localism? There's nothing more local than low-powered radio. So the FCC will make it easier to get into that once-banned business.
The expert on low-powered radio is Reason's Jesse Walker, author of Rebels in the Air and numerous articles on micro radio. So I was interested in his comments on Powell's announcement yesterday. Reasoners are constitutionally unable to ever say anything nice about any government official, but this comes awfully close. Powell is the most free-market FCC chairman we've had since the Reagan administration. (Regulatory jobs don't usually attract people who distrust regulation.)
Posted by Virginia Postrel on August 21, 2003 • Comments
For years, people have been proposing a seemingly simple solution to spam: charging for email. My friend Jonathan Rauch got a lot of attention with his articles in National Journal and Slate advocating a pricing solution, but the idea is hardly novel. Here's a 1997 Reason article by Michael Lynch that not only raises the idea but quotes Esther Dyson who'd already been pushing it for several years way back then. (Here's a piece she wrote last year on a company trying to make such a service work.) If it's such a good idea, and everybody has already thought of it, why hasn't it happened? In today's Hit & Run, Jeff Taylor proposed email charges and elicited some comments on the technical problem. He also elicited a lot of Microsoft bashing, but this latest virus is a real pain even for those of us who use Macs. It may not wreck our software, but it sure clutters the inbox. Fortunately, SpamAssassin sends most of my junk to a separate folder.
Posted by Virginia Postrel on August 21, 2003 • Comments
When I was researching my book, The Great Indoors, a free-standing division of Sears, was doing fine. The hard asses at Forbes even held it up--with a convincing and rational argument--as a model for what Sears as a whole should become.
Now Sears has a new CEO, who's doing what Sears CEOs always do--thrash around for a successful strategy. The Great Indoors, which was his predecessor's idea, is losing money, and he's thinking about shutting it down, according to this trade mag report. Sears apparently isn't ready to serve the aesthetic economy. Not surprising, but embarrassing since I used The Great Indoors as an example in the book. (Publisher's Weekly, not me, called the place "hugely successful". I took the "show, don't tell" route, cited numbers, and described the store and its customers.)
I'm not convinced any strategy can save Sears. The one Forbes advocated, concentrating on hard goods while getting rid of apparel, makes a lot of marketing sense but apparently wouldn't generate enough revenue. Ignoring aesthetics, as Sears has traditionally done, won't help the company. But paying attention won't necessarily save it.
Posted by Virginia Postrel on August 21, 2003 • Comments
While Zack Lynch is off writing a book, Corante's Brain Waves blog, which covers "neurotechnology," has been featuring guest writers--and has attracted a stellar lineup. I highly recommend a visit.
Posted by Virginia Postrel on August 20, 2003 • Comments