Category: Economics


Damnit, BestBuy

It’s really sad in the current economy, with things as bad as they are, when a store makes you wish it’s competitor was still in business. I’m talking today about BestBuy, and the indifference to customers they seem to have.

A month ago, I braved Black Friday to purchase a Nikon lens that was available locally, to avoid waiting 3 or 4 days for a delivery from one of the main retailers online. Figuring it was Black Friday, I paid for it online, so I’d only have to go into the store and pick it up. They even emailed me on my way to the store to tell me it was ready.

Once I got there, I went back to the camera department, thinking I was supposed to pick up my lens there. Brandishing my receipt, I was told to head over to customer service, as they would have the lens at the desk already. Excellent. I walk over, wait in line for a few minutes, and get to the front of the queue. The guy behind the desk looked through all the little cubbies looking for my lens. Finally, he called back into the inventory guys, and asked where it was. We started waiting.

Over the course of the next 40 minutes, he called Inventory back a few times. Finally, someone ran from the back of the store – from the direction of the Camera department – with my lens in hand. This whole time, the checkout lines were moving smoothly, and a number of sales reps had walked around casually behind the Customer Service desk.

It gets better.

A few days ago, the last of the extra earbud covers for my headphones came off, and I begrudgingly admitted that it was time to get a new set. (After going through all four sets of earbud covers over the course of the last 14 months, and having paid $18.00 for the earbuds, I can’t say I was disappointed – I got my money’s worth.)

So, I went into a BestBuy near my house to get a new pair of headphones. I wasn’t sure exactly what I wanted, but I had cash in hand, and I was determined to leave with a new set. I wanted to spend a bit more – between $35 and $50 – to get a set that would last longer than a year, and would be comfortable to wear for longer periods of time. I walked in and looked around for a sales representative.

And looked.

And looked. None were to be seen. This is on a weekday night between Christmas and New Years, around 6:00 PM. You’d think there would be some staff, somewhere, to help customers out. Nope.

Well, I’m smart guy, so I figure I can find headphones. How hard can it be? After walking through the stereo/speaker section, the TV/video game section, the phone section, the MP3 player section and having started to walk through the racks of DVD’s, I finally notice some sales reps helping a customer over in the Computer department. Three guys, one customer. One of the guys was on the phone, the second was staring at the first, and the third was leaning against the wall. They hadn’t been there earlier, but whatever. I ask the guy leaning against the wall where the headphones are. He just stares at me. The guy on the phone stops talking into the handset, looks over at me (without putting the phone down) and says: “What kind of headphones?”

“Regular ones, I guess?” I reply.

“Well, the wireless ones are over there” he says, as he gestures to one part of the store, “and the normal ones are over behind the MP3 display, over there” and waves his hand in another direction. Then, he goes back to his phone conversation. The other two guys don’t react at all. So, I walk over, alone, to the rack indicated, and look at my options. There is a lot of really cheap looking SkullCandy stuff, a few pairs of overpriced Sony earbuds, and a bunch of wildly expensive (but nice) Bose noise canceling sets. Nothing mid-range at all, nothing that really looks comfortable for the long haul in the $35 – $50 range.

After a few minutes of staring at the rack, I realize I need something, so I grab the least offensive Sony earbuds, and head out. The only other BestBuy employees I see are one carrying a huge load of boxes, and the cashier, who I must say was very friendly and quite pleasant to talk to. She was probably the only useful person I dealt with in the store.

As I was walking out, after paying, I realized I missed Circuit City – whose employees had a reputation for being pushy salesmen hawking overpriced goods. They may have been pushy, but they knew what they were selling, and would engage a customer to try to meet his or her needs. BestBuy has never done that for me, ever. They have shown me total lack of concern or attention. Thinking back, even when I was buying flat screen televisions or hundreds of dollars of stereo speakers… I never really got decent service. In this economy, how can you afford to operate this badly, with this kind of distain for your customers?

I returned the headphones Sunday night. At this point, I’m only going to shop online.

Local Banks

I love using a local bank. After placing my NewEgg order last night for the computer bits, I got a phone call from a human at the bank – on a Sunday afternoon – about 20 minutes after the order was placed. She properly identified herself as a member of the Fraud Prevention department, gave me her name, and explained that she was concerned about the 4 transactions on the account in a short period of time. She had the exact numbers of each transaction, and asked me to verify the merchant.

It makes me feel better to know my bank is actually looking out for me. It’s what you get for not using a major national bank that only cares about profit, and not about customers.

Paywall Data

Everyone keeps talking about what happens when the paywalls start going up for the new sites – and we finally have some data. After three months, Newsday has a total of 35 paying subscribers. 35.

Schumpeter’s Gale

The opening up of new markets and the organizational development from the craft shop and factory to such concerns as US Steel illustrate the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one … [The process] must be seen in its role in the perennial gale of creative destruction; it cannot be understood on the hypothesis that there is a perennial lull.

—Joseph Schumpeter, The Process of Creative Destruction, 1942

The process of creative destruction is an important one. A classic example is the death of the Polaroid Instamatic film camera once digital cameras became popular. The increasing marketplace irrelevance of IBM when Microsoft released Windows, and the turning of the tide against Microsoft towards Google. The lesson to be learned, on every level – expand your talents and skills, as one day you have to stop doing things the way you currently do them. If you don’t, you will wake up one morning in the near future, and realize that you are obsolete.

Moreso than other industries, this is true in IT. Things are still moving fast enough that the market is very different every few months. If you fall asleep at the wheel, and do the thing you’ve been doing for 5 years, you’ll wake up to find someone else is doing it faster, cheaper and much much better. The best large scale example of this that comes to mind is email. For years, companies, universities and governments have been buying and maintaining their own email systems. Nobody really thought about the economies of scale – even those who were in the market providing webmail (Hotmail comes to mind). They never figured out the two most important features of email – users need more space and interfaces suck. Before Google arrived on the scene the average webmail provider handed out between 5 and 50 MB of disk space per mailbox. Universities offered between 5 and 500 MB, usually tending towards the lower numbers. Usability was a nightmare – left to the desktop client for most things, and the painful webmail interfaces otherwise.

Google changed all of that. When they launched GMail, they announced that everyone would have a gig of storage – and the world thought it was an April Fool’s joke due to unfortunate timing. They had keyboard shortcuts that made sense for email reading, and most importantly, the system felt like it was used by someone who really understood email. Today, 5 years later, GMail gives out 7.5GB of space without blinking an eye. It’s integrated into their jabber server (GTalk) and their web-based Office Suite (Google Docs). They have single sign-on between all their related services. What makes it even crazier is what they charge for it. If you are only getting 50 or 500 accounts, it’s around $60/user/year (including 10 years of legal-compliant archives). When you scale out to a University system, or the City of Los Angeles, the cost drops rapidly. The numbers I’ve heard are around $14/user/year.

Any mail server administrator that runs Exchange, GroupWise, or Lotus Notes needs to be paying attention. It’s getting to the point where if you support less than 4000 users, you are no longer cost effective. It will be cheaper to replace you, the servers you run, and your expensive benefits (401K, health insurance, etc) with the faceless and unsleeping Google Apps administration. Another member of the organization will spend a few weeks scripting the Active Directory environment to auto-provision email accounts from Google when new people show up (and, hopefully, disable accounts as people leave). The lowly mail server administrator’s career is going to be over in a few years.

Now is the time to learn other skills. Most good administrators aren’t good because they know one product very well. They are usually good because they know a whole range of products and skills very well. They look at the Google Apps as a welcome thing. Google is offering to take a tedious, boring and repetitive task off their hands, and free them up to work on the next fun project. Control freaks and lesser administrators fear Google, because it’s going to replace their only skill set. Schumpeter’s perennial gale of creative destruction is blowing.

RIAA: DIAF

Recently the FBI rounded up the heads of the largest music copyright infringement ring in the world and taken them into custody. They are known to have distributed over 25,000 albums, most of them before their release to the public. Each member is being charged with a single count of ‘conspiracy to commit copyright infringement’ that carries a maximum penalty of $250,000 USD fine and up to 5 years in jail. That’s $10 per album – the price you’d pay on the iTunes Music Store – or about $1/song, assuming a typical album has 10 songs. Now for the fun part. If they had been popped by RIAA and MediaSentry, and had been found guilty on the sliding scale that is civil copyright law, they would have been paying $22,500 USD per song. That’s $5.6 billion USD in damages.

The lesson learned here? It’s better to run a criminal conspiracy to with intent to commit copyright fraud than it is to use Kazaa or Limewire. If you get caught, the punishment is orders of magnitude less. Please, Recording Industry Association of America, die in a fire.