В дни предсезонных тестов, которые сейчас проходят в Испании, заводская команда Maserati представила свою новую машину, получившую название Tipo Folgore...

Команда MP Motorsport объявила, что Ричард Ферсхор сядет за руль одной из её машин в оставшихся гонках сезона, а также будет выступать в 2025 году...

Специалисты Honda Racing Corporation разработали и успешно испытали на трассе новый двигатель HRC-K20C, созданный на основе силового агрегата от серийного автомобиля Honda Civic Type R...

В ноябре в прокат выходит сиквел Ридли Скотта "Гладиатор 2" с Педро Паскалем, Полом Мескалом и Дензелом Вашингтоном. К участию в промо-кампании, которую проводит Paramount Pictures, присоединилась команда Ferrari.

В 2025 году на старт марафона «24 часа Ле-Мана» Porsche выставит три гиперкара 963, и в одном из экипажей, в который входят Ник Тенди и Фелипе Наср, есть вакансия. Директор заводской программы Porsche LMDh Урс Куратле допустил, что место за рулём получит Себастьян Феттель.

Дэн Фэллоуз оставляет пост технического директора Aston Martin F1 – как сообщает пресс-служба команды, это произойдёт уже в ноябре...

Have you ever found something you started writing but never finished? Here's something I started in October 2014. I've just rediscovered it in July 2020....

I'm very interested in eLearning designs that try to entwine content and exercise so thoroughly that the learner almost constructs their instruction – even if...

Sometimes, I feel like eLearning drag/drop interactions get a bad rap. Maybe that's because Serious Instructional Designers seem fairly dismissive about them in casual conversation?...

Today, I saw a definition of Problem that I disliked VERY MUCH. Granted, this was in a Root Cause Analysis manual, so I expected much...

I posted about Situational Awareness at HPT Treasures today. What I didn't say in that post was that I've experimented with a few different methods...

This week, Beat's Bizarre Adventure covers ICHI THE WITCH, IMA KOI: NOW I'M IN LOVE, and THE DRIFTING CLASSROOM.

Shinichiro Watanabe compares COWBOY BEBOP to LAZARUS but admits nothing beats his experience on SPACE DANDY in this interview.

The first volume of Eden of Witches releases on Nov. 12.

This week's Top Comics to Buy for November 13 features buzzy books like Absolute Batman, G.I. Joe, and more!

Papercutz has announced Flash Gordon: The Girl from Infinity, which reimagines the iconic character, for release in 2025.

The Small-Animallike Lady is Adored by the Ice Prince is a brand new romance manga from Yen Press. This first volume takes us to a familiar setting where there's a royal arranged marriage involved, and some frozen hearts are melted along the way!

Henry Barajas' Death To Pachuco , a Chicano noir set in the Zoot Suit Riots, is now live on Kickstarter

Dark Horse Comics has announced a six-volume Madman Omnibus release featuring Michael Allred's classic character, slated for release in 2025.

Dylan Mars Greenberg crafts a homegrown fantasia of magic, action, and anti-conservative provocation.

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Due to demand from vendors, The Brooklyn Independent Comics Showcase (BICS) is going to a two day show in 2025

#54-Enlightenment - Waking Up from Our Dreamed Life

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#55 Enlightenment - How to Let Go of Our Suffering & Live

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#56 Enlightenment - The Effortless Living of an Enlightened Life

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When I was an undergraduate at university many years ago, my deep enjoyment and love for the works of William Shakespeare blossomed. I had the privilege of taking a Shakespearean class and then during one summer in my undergraduate years, I was able to travel through Europe inexpensively on a bike and a Europass to see the great sites. A memory I remember most is going to Stratford-upon-Avon and watching a William Shakespeare play. I don’t know where my passion and love for his plays comes from but it has been a deep part of my life. His writings have also taught me many things.

When I was in England many years ago for the first time, I was standing in the back of the audience watching the play ‘As You Like It’ that was performed not too far from the ... Read More »

The post What Shakespeare Can Teach Us About Enlightenment: All the world’s a stage appeared first on Enlightenment Podcast.

When we wake up to who we are, something happens. We stop identifying with our egoic selves because we realize they are impermanent and only that which is permanent can be who we are.

We aren’t our bodies, we aren’t our memories, we aren’t our thoughts, we aren’t our feelings… We aren’t any of these things, so we stop identifying with them. What happens is that detachment develops. An aloofness or distancing from everything that occurs. We wake up to the fact that life is an extended dream and a relaxation is able to set in. It’s a sense of calm or a feeling that ‘all is well.’

We lose our identity with our lives, thoughts and feelings, so we witness them but we don’t engage with them. We notice them, but we don’t create stories with them. Since we don’t create ... Read More »

The post The Paradoxical World of Spiritual Enlightenment: We are nothing but we are everything appeared first on Enlightenment Podcast.

#57 Enlightenment - Ending Our Suffering through Witnessing Our Suffering

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The post #58 Enlightenment – Questioning Who We Are appeared first on Enlightenment Podcast.

The post #59 Enlightenment – How to End the Suffering in Life appeared first on Enlightenment Podcast.

For many years, the fees charged by investment managers of mutual funds grew ever so slightly, gradually approaching 1.5%. Over the last few years, though, the growth in these management fees has stopped. In fact, it reversed. Last year the average management fee charged for actively managed mutual funds was 1.38%, or 138 basis points, where a basis point is one tenth of one percent. But that average is badly misleading. It’s misleading because it treats all funds, regardless of size, as the same. When you adjust the fees for the size of the funds, you find that the dollar-weighted average for actively managed funds is now below 100 basis points. Three things have caused this reversal in management fees: low returns in the stock market, the growth of exchange-traded funds (ETFs) and a price war among the biggest players in the market.

The first two of these factors need little explanation. Over the last ten years, an investment in many bond funds out-performed an investment in diversified equity funds. These low returns have many investors focusing on the costs they incur for the management of their money. These costs include transaction fees for trading securities and management fees for the companies managing mutual funds or exchanged-traded funds. The second factor, the growth of ETFs, is somewhat less obvious, but important. ETFs have garnered a significant share of new money invested in equity funds over the last few years. Companies managing ETFs charge low fees for managing these funds because they have very low costs for shareholder servicing and some other administrative functions associated with investment management. Shrewd mutual fund managers have reduced prices in order to manage the gap in pricing they allow for their managed mutual funds compared to comparable ETFs.

These two causes of the fall in prices for investment management now have a third important factor. This third factor may turn out to be the most important of all. (See the Symptom & Implication, “The industry is seeing its first price wars” on StrategyStreet.com.) As described in other blogs (see blogs HERE and HERE), Vanguard has started, and continued, a price war in the ETF market. For example, iShare’s MSCI Emerging Market’s ETF and Vanguard’s Emerging Market’s ETF compete directly. Vanguard’s fund charges 27 basis points. The iShare’s fund charges 69 basis points. The iShare’s fund entered the market well before the Vanguard fund, and was much larger than the Vanguard fund. However, during 2010, the Vanguard ETF added $18 billion to its fund while iShare’s added about $4 billion. Price matters among peers.

The iShare’s funds are not always market share losers, however. The iShare’s Gold Trust is an ETF that competes with a larger rival, SPDR Gold Trust. Until June of last year, both of these ETFs charged 40 basis points. In June, iShares cut its management fees to 25 basis points. SPDR Gold Trust stayed pat at 40 basis points. Over the next few months, the iShare’s fund gained $875 million in new money, while the SPDR Gold Trust saw a net loss of $1.2 billion of money under management. Price matters among peers.

These management fees can even go to zero. One ETF today has no management fee, zero. It gets its revenues by lending out the securities in its portfolio. (See the Symptom & Implication, “Technology improvements bring falling prices” on StrategyStreet.com.)

Of course, as companies engage in price wars, they advertise their lower prices extensively in order to capture as much market share as possible before their competitors respond. The result: customers are becoming ever more price sensitive about the management fees they pay, simply because the management companies tell them to be more sensitive.

How long will it be until this fee warfare spreads to other smaller types of ETFs? Not very long, as long as price moves share.

After nearly four years, AT&T has lost its exclusivity on Apple’s iPhone. It has been a great run. Now AT&T faces the formidable competition of Verizon, who started offering the iPhone in February of 2011. Market shares are about to shift. Let’s look at how they might change.

Market shares among established customers shift for one of two reasons. (See Audio Tip #40: The Components of Market Share Change" on StrategyStreet.com.) First, a competitor may “win” market share by offering a benefit that more than half of the market suppliers do not offer. On the other hand, market share may shift away from a competitor if it “fails” its customer relationship and opens that relationship to other competitors. A company “fails” a customer relationship when it refuses, or is unable, to offer something that half the other competitors in the market can or will offer.

AT&T garnered much of its share gain over the last four years with a “win.” That “win” was due to its exclusive offering of the Apple iPhone. While it won business with the iPhone, it developed a reputation for problems in the quality of its services. iPhone users tended to overwhelm the AT&T network and cause interruptions and dropped phone calls. AT&T’s customer service has been suspect as well. Still, its market share has grown with the iPhone, primarily at the expense of the smaller carriers. Its market share growth due to the exclusive on the iPhone offset its “failures” in its network and customer service.

Now Verizon enters with its own version of the iPhone. Today, any customer who wants an iPhone can choose either the largest competitor in the market, Verizon, or the second largest competitor, AT&T as his or her carrier. So, Verizon can “win” market share against the smaller competitors as well. These competitors, such as Sprint, Virgin Mobile and others like them, do not offer the iPhone and are unlikely to do so soon.

Verizon should also be able to gain share at the expense of AT&T. Here’s how. iPhone-using customers who are dissatisfied with their current service with AT&T now have a viable, high quality competitor offering an equivalent service with the same phone. Some of these customers will leave AT&T because they perceive that AT&T’s services are not up to the standard of the other competitors, especially Verizon’s, and migrate to Verizon. This is a phenomenon we call “flight to quality.” This “flight to quality” is also an example of a “weak win,” where a competitor gains share only after an incumbent supplier has “failed” the customer relationship.

This “flight to quality” is unlikely to be dramatic. A company can “win” share quickly with a unique Function. On the other hand, a “flight to quality” usually brings share gains in dribs and drabs. It produces share gains slowly, over time, because of inertia in the customer relationships. This inertia allows AT&T time to get its house in order before it suffers a great deal of customer immigration. (See Video #36: Probable Priorities for Innovation in Hostile Markets on StrategyStreet.com.)

A Next Leader competitor is in an extremely fortunate position. A Next Leader is a competitor or product that offers much better than industry standard performance for a low price to a specific subset of industry customers. While offering better benefits to some customers, it may reduce benefits for others. But all Next Leaders offer low prices. The Next Leader can do this because it has a very low cost structure. (See “Video #22: Definition of Next Leaders” on StrategyStreet.com.) Next Leaders do not appear in many industries. When they do appear, they can change an industry, whether the industry is in manufacturing, retail or service. For example, Toys R Us invented the Toy Retailing Category Killer, a Next Leader product. Home Depot has done much the same in hardware retailing. Other Next Leaders include the early Apple personal computer, Intuit personal financial management software, Jiffy Lube in auto services and Domino’s Pizza.

We have studied many Next Leader competitors. Our study has suggested there are two kinds of Next Leaders products: Reformers and Transformers. A Reformer product is a type of Next Leader that reduces the benefits for the user while increasing benefits for the buyer, compared to the industry’s Standard Leader product. Jiffy Lube and Domino’s Pizza would both be Reformer Next Leader competitors. The second type of Next Leader competitor, Transformer products and companies, increase the benefits for the user of the product but offers, at least initially, fewer buyer benefits than the Standard Leader product. Toys R Us and Home Depot are two examples of Transformer Next Leader competitors.

Direct Edge is an example of a Transformer competitor. It offers its customers very fast securities trading on virtually any platform, from computers to smart phones. It is a young electronic stock exchange and it is having a big impact on securities trading. Its first noticeable impact is in market share. As recently as five years ago, the New York Stock Exchange accounted for 70% or more of the trading in the stocks listed on its exchange. Today, the stock exchange handles 36% of those trades. (See “Audio Tip #85: Evaluate the Company's Success in Penetrating each Price Point in the Market” on StrategyStreet.com.) Twelve other public exchanges, several electronic trading platforms and many “dark pools” command the rest of the market share in NYSE listed stocks.

Direct Edge came into existence during 2010. Several brokerage firms and other financial players formed Direct Edge to offer a counter veiling power to the New York Stock Exchange and Nasdaq. Direct Edge now owns 10% of stock trading in the United States.

Direct Edge is not only big and fast-growing, but inexpensive as well. It has ready access to the share trading of its brokerage house and hedge fund owners. It operates many banks of state-of-the-art computers in warehouse-type facilities in New Jersey rather than in more-expensive New York. And, despite its size, it has fewer than one hundred employees.

The evolution of these non-traditional exchanges has resulted in declining trading costs and much faster trading times for all customers. Next Leaders do that.

Years ago we were doing some work in the roofing business. In one study, we were working on the asphalt shingle roofing manufacturing business. At the time, this was a terrible business. Returns were low, growth rates were modest, at best, and there was a good deal of overcapacity in the industry. Then the industry caught a break. A shortage in asphalt developed. This shortage of asphalt rolled through the asphalt shingle plants and restricted their output. Immediately, prices jumped, returns became attractive and industry participants breathed a sigh of relief. Unfortunately, this asphalt shortage did not last very long. The industry shortly returned to its previous hostile condition. (See the Perspective, “What Ends Hostility?” on StrategyStreet.com.)

A shortage in any component, or labor, will restrict industry capacity and tend to raise prices. A labor shortage is, in part, responsible for some of the high prices in mining today. Miners work in areas that are often hard to reach. They also are skilled employees. The run-up in commodity prices, especially those related to ores such as silver, gold and copper, has increased the demand for these skilled miners. In addition, the mining industry faces competition for skilled workers from the oil and natural gas industries, which are also growing.

Mining companies are now going to great lengths to attract and retain these skilled workers. Some of these miners are now earning 25% more in compensation than they were a year ago. Some companies are flying workers to and from remote mines. For example, BHP Billiton plans to fly 500 workers from Brisbane, about 500 miles away, to a coal mine site that they are opening and then fly them back home after a couple of weeks.

If this commodity boom continues, the industry’s total capacity will be determined more by labor availability than by its more traditional measures of capacity. (See “Audio Tip #117: Capacity Constraints and Pricing” on StrategyStreet.com.)

Recently, Apple rejected a digital book application from Sony. The disagreement here is over how and when Apple collects for its services. Apple is playing a dangerous game.

In theory, Apple has the right to insist, under its terms for developers, that any app, which offers customers the ability to purchase books outside of the app, offer the ability for customers to purchase within the app at the same time.

Here is the rub. In its application, Sony sends customers to its own web site where they complete the purchase of a book. By routing the customers to its own web site, Sony is able to avoid a payment of 30% of revenues to Apple.

Others, including Amazon, with its Kindle, and Barnes & Noble, with its Nook, have been able to sell e-books by sending users to the companys’ own web sites. Apple simply was not enforcing its policy requiring developers to use its in-app purchasing feature to buy new content.

A 30% charge on revenues is a high price to pay Apple. Apple may be setting itself up for future loss of market share by enforcing this policy. If the Android platform does not put the same requirement on its app developers, the developers will have a strong incentive to avoid the 30% charge by encouraging customers to purchase using an Android device rather than an Apple device. Alternatively, the application developers may charge a higher price for purchases through Apple.

Apple’s unique strength has been its superior list of available applications. Apple’s enforcement of this requirement to purchase inside the app so that Apple can collect 30% of the revenues puts at risk its major advantage. Apple needs to compromise here by charging a lower price or no price at all. After all, it already makes high profits on its hardware and software product combination. It also makes profits on many of the downloaded apps. The application developers are customers too. Why make their life difficult? Does the benefit Apple provides a seller justify 30% of revenues? Sounds pretty rich.

The United Autoworkers (UAW) is on a new campaign. The union plans to organize workers in hither-to non-union foreign-owned automobile plants in the United States. This campaign may or may not work, but in the long run it will prove futile unless the union can compete in the international market, against all international auto workers.

There are 575,000 autoworkers in the U.S. Nearly 20% work for foreign-owned plants. All of these plants are non-union. The foreign-owned plants were intentionally placed in right-to-work areas, many in the South.

The UAW is likely to have some difficulty succeeding with this campaign. The non-union workers already earn highly competitive wages and benefits. To date, these U.S. workers in plants owned by Toyota, Volkswagen, Hyundai and Honda have shown little interest in unionization.

Why would the union be so interested in this initiative? To preserve its membership. The traditional problem with unions is less the rate of wages they demand and more about the work rules they impose. These work rules reduce the productivity of the unionized plants. That has certainly been the case in the U.S. auto industry. As a result, the UAW is losing membership as UAW auto plants in the U.S. close under the onerous costs the UAW plants carry. If the union can succeed in unionizing the domestic foreign-owned auto plants to the same extent they have unionized the domestic manufacturers’ plants, they will be able to impose the same work rules and produce roughly the same productivity. The result should, in the union’s eyes, be a reduction in the rate of jobs lost in the union.

But there is a problem here. The UAW has already seen that it was unable to stop new non-union plants in the U.S. How will it stop future non-union domestic plants? O.K., let’s say they can do that. Will they also be able to stop all foreign non-union plants from becoming established and growing? Certainly not. Unless the union membership can compete on an international basis with competitive costs and productivity, this unionization effort is wasted money. If it succeeds, the U.S. loses more plants to plants located offshore. Union membership still falls.

It seems that one of the problems for unionized employees is one of definition. Union members often call their compatriots in competing companies “brothers and sisters.” These are certainly not brothers and sisters. In a marketplace they are competitors. Union employees have to be able to beat, or at least stalemate, these competitors or lose their jobs. This is true as long as the UAW can not control the entrance of other less expensive competitors, either in the U.S. or elsewhere.

The long history of the DRAM semiconductor market illustrates this. The U.S. manufacturers of DRAM semiconductors faced intense competition from the Japanese in the 1980s. The domestic industry succeeded in slowing the Japanese by using the International Trade Commission. Then arose new and equally troublesome problems. These problems were DRAM semiconductor facilities in Taiwan and Korea. Eventually, the U.S. industry evolved to the point where it had only one domestic producer of DRAM chips. Intel was one of the early competitors to get out of that market to focus its resources in the more complex, and much more profitable, domestic micro-processor business. SX4MBURBCAJQ

Over the last several years, we have studied many examples of cost reduction initiatives to improve productivity and create economies of scale. In simplest terms, there are four actions that improve productivity and economies of scale. First, reduce the rate of cost you pay for an input. Second, reduce the inputs that do not produce output. Third, reduce unique activities or components in products and processes by redesigning the products and processes. Fourth, spread fixed cost activities over new product output. The cellular telephone carriers are introducing measures to reduce their costs by redesigning the product.

The wireless carriers use cellular towers to broadcast their signals. The cellular product design offers signals traveling long distances, primarily for voice and for relatively low data speeds. A cellular tower is expensive but capable of sending a signal for several miles.

This cellular technology worked well until the evolution of the smart phone. The growth of the smart phone has put very high demands on the cellular tower infrastructure because of the heavy data usage it brings to the market. Since 2010, data has taken over the majority of network traffic from voice communications. Now the carriers and, in particular, AT&T with its Apple iPhones, is having difficulty keeping up with the growth in demand.

AT&T today and, likely a few others in the future, has found a potential innovative solution, adding Wi Fi access points. These Wi Fi access points are ideal for heavy data traffic sent at high speeds over relatively short distances. Wi Fi access points transmit signals over a few hundred feet. The Wi Fi access points are smaller, easier and cheaper to install than are cellular towers. This low-cost approach appears to make sense in areas with high density of users. AT&T has placed them in New York’s Time Square and Rockefeller Center, in downtown Charlotte, North Carolina, in neighborhoods surrounding Chicago’s Wrigley Field and in San Francisco’s Embarcadero Center.

But there are some drawbacks to Wi Fi access points. Sometimes, a user has to take several steps to connect to a Wi Fi access point. Signals from the Wi Fi access points may interfere with one another, if signals come from multiple networks. Some smart phones do not have Wi Fi capability. These disadvantages have, so far, held back Verizon Wireless’s adoption of this apparently low-cost approach to providing service.

AT&T is leading this cost-saving innovation experiment. Their network strains force it to be creative and experimental. AT&T saves costs by redesigning the product itself using a less expensive technology with some shortcomings. If the AT&T experiment proves both cost effective and acceptable to cellular customers, every other wireless carrier will be forced to adopt it. And since a Wi Fi access point is largely a fixed cost, the wireless carriers with the highest density of membership within the Wi Fi area will have the lowest cost per unit. In most areas of the country that is likely to be either Verizon or AT&T. They will end up getting a unit cost advantage over their smaller competitors…if this works.

Don’t look now, but we are entering the world of F-commerce. What is that, those of you older than thirty will ask? F-commerce is selling through a Facebook page.

The trend is early yet, but likely to turn into a stampede. JC Penney and 1-800-Flowers.com both have established full E-commerce stores within their Facebook page. The stores include check-out and other features you typically find on an E-commerce web site. Facebook claims that twenty-five of the largest retail sites are already integrated with Facebook, as are seventeen of the twenty-five fastest growing retail sites.

Think of Facebook as a virtual mall. There are all kinds of people wandering around there, talking to one another. Facebook offers a nice opportunity for a company to interact with customers and allow them to bring their friends into the conversation to evaluate styles and colors and so forth. If a company integrates its storefront with the Facebook page, its Facebook “friends” will never have to leave the virtual mall in order to purchase. This is an important product innovation.

Product innovations reduce customers’ effective costs in one of three ways: add information about the product and how it is to be used, reduce the resources the customer must use with the product, or improve the customer’s experience with the product.

This innovation improves the customer’s experience with the product by increasing the customer’s sense of security in using the product. It allows the customer to get her friends’ opinions on what she is purchasing. Secondarily, the Facebook store reduces the customer’s resources used with the product by reducing the time the customer must spend in using the product. The innovation reduces the steps the customer must take to make a purchase and it places the company’s product closer to the customer’s location.

This is going to be a train to the destination of millions of customers. Every mainstream retailer has to get on board.

The government deregulated the airline industry in 1978. Since that time, the basic pricing in the industry, as well as airline fortunes, have been more or less continuously on the downward slope. It has been a very long trip down.

The industry may be heading up again, though. In the third quarter of 2010, the average domestic airfare was 11% higher than a year earlier. Profits returned to the industry in 2010 behind higher prices. In some part, these higher prices were the result of the additional fees that most of the domestic carriers charged passengers for checked baggage, better seating, rerouting and so forth. Still, the industry was able to hold its higher prices.

These prices are holding because the major industry players are less enamored of discounted flying. All of the big airlines are finding ways to extract prices from industry customers. Now that airline capacity utilization is high, the industry is more careful about capacity additions. Higher prices are here to stay.

The consumer still is far ahead. Even at these higher prices, ticket prices are a bargain. In fact, ticket prices, adjusted for inflation, are 20% below the levels of 1995. The industry has continuously stripped benefits from the base product in order to save costs. In 2010, the industry added back a few of those benefits (for example, economy plus seating) for an additional charge. We may see more of that over the next few years.

The newspaper industry has faced a mighty challenge over the last few years. There is so much “free” content to complete with them. Newspaper revenue continues to plummet. Internet users are reluctant to pay for content. All the free content, supported by advertising revenue, has decimated the newspaper industry. The industry’s cousin, the magazine industry, is not far behind.

This trend can’t continue forever. Already, many people are asking themselves how much they can trust the information on the internet. The need for Reliability drives the demand for Snopes.com. How many “free” web sites can earn enough from advertising to pay all their bills? An effective industry answer to “free” may be forthcoming in the News Corp online newspaper called “The Daily.” The Daily will cover general news, sports, arts and opinion in a format dedicated to the Apple iPad. In addition to the written content, the product will carry high definition video and 360 degree photos. The same product will be available in a few months for the Android-based tablet computers.

The Daily will sell for $.99 a week, or $39.99 a year, a very low price compared to newspapers. With this model, the product receives revenues both from the subscribers and from advertisers. Subscribers have the Reliability benefit of knowing that the content producer cares about facts, accuracy and readable writing style. Advertisers pay for eyeballs that follow a Reliable product.

The Daily is what we call a Next Leader product. This is a product that offers much better than industry standard performance for a low price to a specific subset of industry customers. The Next Leader can offer the very low price because it has a much lower cost structure than is typical in the industry. There are two basic types of Next Leaders. The first are Reformer products. This type of Next Leader product reduces the benefits for the user (usually Function benefits) while increasing the benefits for the buyer (usually Reliability and Convenience benefits) compared to the industry Standard Leader product. The second of the two types of Next Leader products are Transformer products. These products increase the benefits of the user but offer, at least initially, fewer benefits to the buyer than the Standard Leader product offers. The Daily is a Reformer product. It offers the Convenience of formatting fit for a tablet computer so it provides easier access for a segment of the industry’s customers. Its low cost structure results from its elimination of printing presses and distribution costs.

If this new tablet-based product offers a quality read, it will hasten the day when virtually every newspaper and magazine is offered first online and only secondarily in hard copy. The online versions will come at a fraction of the cost of the hard copy versions. Readership is certain to grow.

The home appliance market has been a difficult place to compete during several periods over the last thirty years. It is tough again today. Sales of large appliances have fallen steadily since 2007. Competition is intensifying with the pressure of the South Korean competitors, LG Electronics and Samsung Electronics, on Whirlpool Corp and Electrolux AB. Whirlpool and Electrolux are suffering from rising costs for steel, copper, plastics and other raw materials. To offset these cost increases, the two companies plan price increases of 8% to 10% in the spring.

The problem: the Koreans aren’t playing ball. The two South Korean firms are pricing aggressively and have been doing so since Thanksgiving 2010.

The South Koreans are formidable competitors. At one time, LG was known as Lucky Goldstar, a seller of low-end, cheaply made, products. Today, it has a much better brand name and sells quality products. Samsung does as well. It is a leader in the large screen TV market. The products that the South Korean companies are pricing aggressively are not the low-end products. They are the mainstream, heart-of-the-market, products.

The domestic U.S. market is slow growing. So is the market in the rest of the world. The North American market is growing 2% to 3% a year. Europe is growing 2% to 4%, while Latin American and Asia grow in the 5% to 10% range. Large appliance companies will have no trouble supplying all the capacity the market needs at these demand growth rates. The industry is likely to have excess capacity for the foreseeable future.

If the two Western competitors institute their price increases without the two South Korean companies in a lock-step march, they will be in a Leader’s Trap. A Leader’s Trap occurs when one or more of the leading companies in an industry hold its prices high in the mistaken belief that customers will stay loyal despite the lower prices of competition. Leader’s Traps rarely end well. Either the Western competitors will lose market share or they will ultimately rescind their price premiums.

These four giant large appliance competitors are peers of one another. The only way to stop the Koreans from discounting against the Western competitors is to have a cost structure that scares them out of the discounts. The discounting competitors have to see that their discounts will only cost them margins because the other peer competitors in the market will match their low prices since they have equally low cost structures.

In 2005, Amazon introduced its Prime Free Shipping program. This yearly subscription program promised free two-day shipping on any purchase the subscriber made from Amazon. Five years later, 13% of Amazon’s 130 million active users are Prime members. More significantly, 20% of the subscribers who purchased products from Amazon in the last twelve months are Prime subscribers. These Prime subscribers purchase two to three times as much as non-Prime subscribers over the course of a year. This Performance innovation removes an impediment to purchasing on Amazon. In fact, it increases the odds greatly that online purchases will be made on Amazon rather than on a competitive site. This has been a blockbuster innovation for Amazon. The innovation holds a special appeal to the larger customers in the market. The Prime subscribers may also offer Amazon an entry into a business that it has longed to gain, for several years, subscription video rentals. It appears that Amazon will introduce a streaming video product for its Prime subscribers. This new product will not cost the Prime subscribers any more than their normal subscription. Netflix’s Watch Instantly service cost about $96 a year so Amazon may have a price advantage on Netflix. Of course, Convenience and Price are only important provided Amazon offers equivalent Function, that is, streaming video content. We don’t know about that yet. Still, Amazon has proven to be an innovative company who can find ways to build a business in non-traditional ways. It continues to grab market share in the retail business.