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Microsoft promoting Hewlett Packard - Why?

Why has Microsoft made a 60 minute advertisemnt showing someone buying a Hewlett Packard Notebook?

Windows Laptop Hunters $1000 - Lauren "Not cool enough to be a Mac"

If I was CEO of one HP's competitors, say Dell, Lenovo, Asus, etc., I'd be screaming down the phone to Microsoft's CEO, Steve Ballmer.

On the surface, the ad appears to be a clever retort to Apple's "I'm a Mac" ads, but digging a little deeper reveals a lot of murky issues:

• Lauren will have to live with Vista;


• Lauren could save even more money if she didn't have to pony up for a Vista licence. If she wanted to install Linux, or dare I say, turn her laptop into a hackintosh, that Vista licence is a double-waste;


• MacBook Pros are arguably better machines, and come with an arguably better Operating System;


• Sticker price always neglect the total cost of ownership, where Macs are generally considered to provide better long term value.

Of course, other people have already commented on these and other issues: e.g. that "the ad was staged", and that the theme of the commercial seems to be “PCs: Computers for Losers”.

Another thing this ad shows is that Microsoft willingly ignores generally accepted rules of advertising. For example, according to the panel of The Gruen Transfer, the acknowledged leader in a market should never mention lesser rivals by name in its ads. Doing so lends credibility to the the challengers. That explains why Pepsi (number two cola maker) refers to Coke (number one cola maker), and never the reverse. And Telstra (number one telco in Australia) never mentions its rivals by name, whereas Optus (the second biggest telco in Australia) deliberately compares itself to Telstra in its ads.

Heatwave Ends (Hopefully)

The maximum temperature in Adelaide today was 41.5 degrees Celsius (107 degrees Fahrenheit). A cool change blew in this afternoon, and tomorrow's forecast is a more pleasant 25 degrees Celsius (77 degrees Fahrenheit). Hooray!

We've had 14 days of temperatures above 30 degrees Celsius (86 degrees Fahrenheit). As I mentioned yesterday, I returned (resorted?) to posting rants here in response to the heat. Now that the heatwave is over, I can give up this self-enforced rant-a-day madness. It's been an interesting experiment, but I look forward to posting less often and with more preparation.

Ranting is a Poor Substitute for Coding

After deciding that I had been reading too many "serious" books in recent years, and given that summer TV is usually pretty bad, I had hoped to spend evenings working on my own programming projects. Until the recent heatwave, this plan had been going quite well. But the heat has made it hard to concentrate and write decent code. Posting rants on this blog has been an alternative way to occupy my evenings, and let off some steam (literally and figuratively?).

However, the results have been mixed. I've been happy with the range of topics and the general structure of the rants, but my words have come out a bit muddled than I'd like. Maybe it's the heat? While that may be a factor, it's more likely that I haven't given myself the luxury of "sleeping on it" and reviewing before publishing. This approach served me very well at Uni when writing essays. It's also been useful when preparing technical documentation for work.

I guess I could go back and revise the rants to make my message clearer. But this is not a professional blog, it's just an excuse to write about things that interest me. I'm not expecting to make a career out of it. I enjoy programming too much ;)

So, don't expect as much activity on this blog once the weather becomes more bearable. But if something irks me enough, I still hope to write a rant about it.

[The extreme heat returned to Adelaide today. The maximum temperature was 43.9 degrees Celsius (111 degrees Fahrenheit)!]

My Saga Buying a Camera

Today I finally got a new digital camera. It's nothing special, just the model above the basic Canon model. But it has been a frustrating experience, so I feel the need to vent...

I'd seen the camera I wanted advertised on special for Christmas last year ($128 down from RRP of $159). When I went to buy it in late December, they'd sold out. So I went around to other stores to see if anyone had it in stock at a reasonable price. But no luck: I couldn't find it anywhere. Looks like it was a popular model last Christmas.

I tried again on the day after New Year's, and found one store that had the camera on sale for $143. Good enough, so I went to the counter to try to buy it. Unfortunately, the display model was the only one they had, and it wasn't for sale. However, I could order one and "it should arrive at the warehouse at the end of next week". I decided I'd spent enough time, so I agreed to order one in. As I was filling out the paperwork, I was told that a $10 deposit was not enough. Since it was a "warehouse" order, the manager informed the shop assistant that I needed to pay the full $143 up front! I knew I should've backed out right there, but it was a reputably chain of stores, and it wouldn't be more than a week or so, right?

The first week passed, and I didn't hear from the store. Another week passed, still no news. Finally, after almost three weeks I headed into the city to find out what's happening with the order. Apparently Canon was experiencing delays in supplying product. I was tempted to cancel the order and ask for my money back. I had seen the same camera advertised and in stock at other stores. But I decided to give them another week.

As I may have mentioned, it's been a hot couple of weeks in Adelaide lately, so I had to put of going back to the store until the weather was cool enough. Today was the day, but before going to the store I thought I'd check if another store had the camera. Yep, sure enough, I saw the exact model in stock and on sale for $128. So my mind was made up: if my camera had not come in yet, I would cancel my order at the first store and go buy it at the other store. And that's how it turned out. The consolation was that I ended up saving $15 at the end of the process.

While the delay may not have been their fault, what really ticked me off was that the store didn't keep me informed of the progress of the order. They just quietly kept rolling over the expected delivery date. There were apparently six other people in a similar situation, all waiting for the order to arrive. I wonder how long those people will wait before giving up? Not a good way to make your customers happy.

I guess I learned a couple of lessons:
1. Don't expect a store to actually have an advertised sale item in stock.
2. Only place an order for something if you're willing to put up with delays.

[Adelaide's maximum temperature reached 35.6 degrees Celsius (96 degrees Fahrenheit) today.]

Windows 7 and Movie DVDs: Examples of Price Discrimination

Apparently Windows 7 (like its predecessors Vista and XP) will give users a choice of multiple versions. See "Windows 7 SKUs announced: your worst nightmare has come to pass" for information about the versions and their distinguishing features.

On the surface, this "choice" gives users the ability to pay only for the features they want. But, what it actually represents, is an example of what economists call "price discrimination". Now, this term sounds bad, but conceptually it's not necessarily a "bad thing". The point I'm trying to make is that the reason for the different versions is not so much to give consumers greater choice, but more simply to maximise the profits of the producer.

In particular, Microsoft is employing a premium pricing strategy. The cost of developing Windows 7 is essentially sunk, and so can be spread out over all the versions (refer: "Pricing Information Goods, Price Discrimination, Pricing Digital Goods"). Therefore, the cost of supplying an additional copy of "Windows 7 Starter" is essentially the same as the cost of supplying an additional copy of "Windows 7 Ultimate" (I'm assuming minimal differences is packaging and number of discs). From the Wikipedia article on price discrimination: "by providing a choice between a regular and premium product, consumers are being asked to reveal their degree of price sensitivity (or willingness to pay) for comparable products." Other examples include bewildering choice of drinks at coffee chains and the pricing of business class airline tickets.

[An aside: "Hey, your an Apple fanboy - what about the two versions of Mac OS X: Client and Server?" The comparison is not really applicable, as these variations are clearly aimed at different types of installation. The Client version actually corresponds to all six flavours of Windows 7: it is intended for an individual's workstation. The Server version is intended to drive backend (i.e. server) systems, and corresponds to the separate Windows 200x Server products.]

For a detailed explanation of how price discrimination increases profits, I suggest you consult Wikipedia or an introductory economics book (e.g. The Undercover Economist or Naked Economics). I'll try giving the gist. In a free market for a product, there is a single price that applies for all units sold. This price represents the point where demand equals supply. Suppliers will continue to sell units of the good as long as the price matches or exceeds the (marginal) cost of producing that additional unit. Now, different consumers value the benefits of the product differently, so some would actually be willing to pay more than the market price if they had to. Those who aren't willing to pay the price miss out altogether. If the seller could charge different prices according to the class of consumers (e.g. by marketing a premium version), it could increase its revenue on the same total volume of sales. This in turn increase profits.

The case of "Windows 7 Home Basic", which is only available in emerging markets, is an example of third degree price discrimination, where "price varies by location or by customer segment, or in the most extreme case, by individual customer".

Those familiar with region coding of movie DVDs should recognise a similarity here. According to Wikipedia: "Price discrimination is especially applicable to movies, because the marginal cost of selling one copy (or viewing) is quite small, giving the seller great flexibility in pricing. There is great disparity among the regions of the world in how much a person is willing to pay for a DVD, and region encoding allows a publisher to sell a DVD for less money in the regions where the demand is low and more where the demand is high."

Note: I haven't mentioned the more contentious issue of Microsoft's predatory pricing through OEM distribution. See "Predatory Pricing - Microsoft's Modus Operandi" for an interesting discussion.

[Adelaide's maximum temperature was only 33.0 degrees Celsius (91 degrees Fahrenheit) today. The temperature continues to fall, but the humidity is increasing.]

Falling Interest Rates: Not Everyone's A Winner

Australia's official interest rate was reduced by 1 percent today: "RBA slashes rates to 3.25pc". Good news for some I'm sure, but for people relying on investment income to pay their bills, it's another shock to deal with. Not only have they seen the value of their investments (e.g. shares and property) fall thanks to the global financial crisis, but in the past few months they've seen returns on their bank deposits plummet.

What irks me is that parts of the media focus only on the "good news" side of the story, and neglect to mention the consequences on self-funded retirees and other people who rely on interest from their money. Remember, people who save money (rather than borrow and spend it) provide the capital needed to finance economic growth.

And the suggestion by some finance experts/talking heads that the Reserve Bank should go even further, citing the near-zero rates in the United States, must surely be joking. They do know what a Liquidity Trap is? The US looks like it's going to suffer a similar fate to that which stalled the Japanese economy in the early 1990s. Investment evaporated, economic activity actually fell even further (i.e. the recession deepened) and deflation set in.

Let's hope governments around the world learn from the lessons of the past. Cutting interest rates to zero won't be enough to get us out of this jam.

[Adelaide's maximum temperature was only 36.3 degrees Celsius (97 degrees Fahrenheit) today. Unfortunately the temperature looks likely to rise before we get a real change.]

Update: About that deflation risk (by Paul Krugman).

Example of Poor Restaurant Service

A couple of weeks ago I had dinner with a cultural studies group. The venue was a suburban restaurant. I'll spare the guilty by not naming the place. I'm not a food critic and, in any case, the restaurant has probably lost enough custom as it is.

The group was scheduled to meet at 7pm, and I was the first to arrive. I usually don't eat much at night, so I was happy to wait until the rest of the party had arrived before ordering.

As people started arriving, our waiter asked for our drink orders. Some people selected drinks from, but I and a few other people just wanted water. The non-free drinks arrived rather promptly, but the water took a little longer.

When everyone in our group had arrived, we ordered our meals. This was about 7:45pm. Within about 20 minutes food started arriving. I was getting hungry at that stage, and a meal was placed in front of me. But alas, this was brought to me by mistake - apparently is was the entrée ordered by someone else at our table, so it was whisked away from me in a flash. A couple other entrées were served at the same time. Hmmm, okay, it would've been nice if the waiter asked us when we were ordering if we wanted the entrées and mains brought out at once. Hopefully the "mains" wouldn't take long to be served.

Over one hour later, our mains had yet to be served. People were getting a bit restless. The waiter kept coming around asking if we wanted more drinks, but oddly never offered us more water. I was now both hungry and quite thirsty by this stage. Not good.

During his visits to take more drinks orders, the waiter failed to notify us that our mains would be delayed. When people started replying that we were more worried about our meals than more drinks, the waiter didn't think of apologising for the delay.

By about 9:30pm, I couldn't wait any longer. I needed to eat some food. I had a headache (which often occurs when I need to eat), so I walked out of the restaurant to clear my head and decide what to do. Should I try to cancel my order and leave to get something somewhere else? I knew that I would still have to pay for the meal if I cancelled the order, so I thought maybe I can grab a bite somewhere else until my meal arrived. As I was walking and thinking I noticed a Chinese restaurant, so I thought I'd grab some spring rolls. I walked in and placed a takeaway order. A few minutes later, I got my spring rolls and ate them as I returned to the first restaurant. Desperate times call for desperate measures, as they say.

When I got back, my meal had finally been served. I started eating it, but found the wait had not been worth it. In disgust, I excused myself, letting my fellow diners know that I was going to pay my part of the bill and leave early. As I paid for the meal, I complained about the tardy service and the fact that the meal wasn't that good. No offer of discount or refund was made, but rather I got a rather weak reply that they were "a bit busy that night". I didn't buy it, and neither did anyone else at our table that night.

[Adelaide's maximum temperature was only 38.8 degrees Celsius (102 degrees Fahrenheit) today. It's still hot, so I'll continue ranting for a little longer.]

A "Wooded" Ville? Sadly, No

As you may know, Adelaide is sweltering as "Southern Australia endures worst heatwave for 150 years".

But the hot weather is not a novelty for Adelaide. So you'd think that authorities would make plans with this in mind? Today's rant is about my local council's failure to think ahead.

I live on an "avenue". According to Wikipedia: "traditionally, an avenue is a straight road with a line of trees or large shrubs running along each side." If only my street could actually live up to the "avenue" part of its name! On days like today I'd be able to walk down it and benefit from some shade. Trees would also keep the bitumen roads from absorbing and radiating large amounts of heat.

What makes the dearth of trees even more ironic is that my council used to be called "Woodville". The intention was for the area it to be a "wooded" ville, i.e. a place with lots of trees. Generally, councils in the western suburbs seem averse to planting trees. Adelaideans living east of the city are fortunate to have had councils with enough foresight to have planted trees many years ago.

Late last year the council finally started a serious tree-planting project down my street. Unfortunately, it could be a while before I can expect any significant benefits on days like today.

[A slight bit of relief today in Adelaide. The maximum temperature was only 40.6 degrees Celsius (105 degrees Fahrenheit)!]

Jobs/Apple Speculation Frenzy

Some of the wild speculation surrounding the health of Apple CEO, Steve Jobs, has been shameful. He's a human being, and now that he's stepped aside as Apple CEO for a while, he deserves some level of privacy and respect. The speculation about Apple's future has also been rather bizarre, and I'll be discussing some of that in this rant.

The revival at Apple since Steve Jobs returned as CEO has been in large part due to his efforts, both direct and indirect. He's assembled a great team of talented people, for example: Jonathan Ive, Tim Cook and Phil Schiller. Obviously, having such an influential CEO stand aside will have an impact on Apple's day-to-day operations. But there are about 35,000 other employees who've had a hand in producing great products too.

Some may point to what happened to Apple after Jobs was ousted in 1985. There are several factors that need to be considered, however: Jobs went on to start NeXT Inc, "taking several Apple employees from the SuperMicro division with him" [Wikipedia]. Then-CEO John Sculley didn't waste time reorganising (de-Jobsing?) Apple. Other top Apple personnel also left around that time (notably chief Macintosh engineers Andy Hertzfeld and Burrell Smith). And in 1987, co-founder Steve Wozniak left Apple. Quite a brain-drain, I'd say.

The current situation is quite different. Jobs has stepped aside, but his hand-picked team remains in place. As has been noted recently, "although the co-founder has been critical to the company's resurgence, his spirit and drive have since been instilled in thousands of other Apple employees".

Perhaps a more appropriate guide is Pixar. Steve Jobs is no longer CEO of Pixar, yet WALL·E (released last year) did rather well. "It grossed $521 million worldwide, won the 2009 Best Animated Film Golden Globe Award and is nominated for six Academy Awards, including Best Animated Feature" [Wikipedia]. After the acquisition of Pixar by Disney in 2006, most of Jobs' creative team has retained control.

In stark contrast, Microsoft's situation does seem to have greatly deteriorated since founder Bill Gates left the company. The past few years have been rather underwhelming for the company: Vista, Zune, Xbox 360's "red ring of death", SPOT, Windows Mobile, Origami/UMPC, PlaysForSure (to name a few problems, failures and missteps).

[Would you believe, another hot day in Adelaide. Today's maximum temperature was 41.1 degrees Celsius (106 degrees Fahrenheit)!]