Scared of Amazon? You Got It Backwards. Amazon Should Be Scared of You

Can you compete with Amazon? Nope. No way, no how. But the good news is, Amazon can’t compete with you either. And, especially as we head into the holiday season, that last sentence should not only give you some hope, it should also give you a sense of confidence that the big bad, bookselling bogeyman from the Pacific Northwest is maybe just so much hot air.

If anyone should be scared, it’s Amazon.

Oh sure, I can hear you now: “What you been smoking there, Strauss?” But before you write me and my crackpot theory off, consider this:

What if I’m right?

Let’s begin with my first proposition, that you can’t compete with Amazon. There is nary a small business owner in the land who would disagree with that one. Picking the low-hanging fruit here. What does just about better than anyone — heck, let’s be frank — definitely better than anyone, is offer a gazillion things for miniscule prices.

By undercutting the competition, Amazon drove Barnes and Noble out of business yesterday, is doing the same to Sears today, and just may do it again to grocery stores tomorrow. There is simply no way that you will ever be able to offer the inventory that Jeff Bezos has, or compete against his low, low prices.

But here’s the rub: why in the heck would you ever want to?

You didn’t start a small business to become a giant behemoth, and I bet it is also safe to say that you don’t really want to be known as the cheapest store in town, as the “low cost leader.” Most entrepreneurs have figured out that competing on price is a risky one-way ticket to Low Marginville; a town where it’s really tough to make a buck and you better sell a lot — again, and again, and again — if you ever hope to live in the nice part of town.

So, there is part one of my premise, and it’s not so half-baked: You can’t compete with Amazon, but nor should you want to.

Now let’s get to the fun part: Amazon can’t compete with you either. What is Amazon really, other than a humungous website with cheap prices for lots of things you will never buy? Whoop-de-freakin-do, they offer “free” two-day delivery. Well, guess what? People can go into your store or shop, be greeted with a smile, and have free immediate delivery. They can take their purchase home with them as soon as they leave.

Can Amazon create a buying experience where customers are warmly greeted by name by a live human being? No. Can Amazon look customers in the eye, crack a joke, and create rapport? Nope. Can Amazon look at what a customer is purchasing and suggest that something else might better suit their needs, or that there is something in the back that would go perfect with that purchase? Hmm, let’s think . . . no; no automaton website can do that, no matter how much AI it has at its disposal.

Amazon can never make a customer feel all warm and fuzzy after a purchase like you can.

Indeed, what small business can do, and does best, is precisely the thing Amazon cannot do, namely, give customers a positive, warm, real, physical experience. People buy from places for all sorts of reasons, price indeed being one of them, but that’s the thing – it is only one of many considerations. Chalk that one up for Amazon. You can win all the others.

This holiday season, let’ see Amazon open the doors to a warm, snuggly store serving hot chocolate and wafting holiday music. Oh, wait, it can’t?


That’s why my last proposition makes the most sense: Amazon should be afraid of you.


Japan's Mitsubishi, U.S. partner to invest $1.8 billion in data centres: media

TOKYO (Reuters) – Japanese trading house Mitsubishi Corp (8058.T) plans to set up a joint venture with U.S. data centre operator Digital Realty Trust (DLR.N) and build around 10 data centres in Japan by 2022 for 200 billion yen ($ 1.8 billion), the Nikkei said on Saturday.

The logo of Mitsubishi Corp is pictured at its head office in Tokyo, Japan August 2, 2017. REUTERS/Kim Kyung-Hoon – RC1E7B85B0E0

Tokyo-based Mitsubishi expects the centres to help meet growing demand for information storage from customers of California-based Digital Realty and generate sales of around 20 billion yen to 30 billion yen in 2022, the business daily reported, without citing sources.

The two companies could invest an additional 300 billion yen in the medium term, the Nikkei reported.

Mitsubishi could not be reached for comment.

Reporting by Osamu Tsukimori; Editing by Tom Hogue

Our Standards:The Thomson Reuters Trust Principles.


Apple's $1,000 iPhone Taught Us A Very Important Business Lesson

Everyone is going crazy over Apple’s new iPhone — for better or for worse. Now, whether you like Apple or not, we can all agree that the price of the newly released iPhone is quite the shocker. That might turn off some customers, but I will make the bet that it’s a smart move for them. Why? A $ 1000 phone actually strengthens what their brand stands for: the highest quality brand, with the best customer experience.

This reputation is what helped them become the most profitable company in the world, and the first US company to hit $ 800 billion in market value, according to Bloomberg Technology. So, what can we learn from Apple? Price is not the first thing most customers care about.

In fact, at my company we actually did a double blind marketing study and here’s what we found that price (surprisingly) came in as the 9th most important factor when people were considering buying a garage door. Let me say that again, Not the first, second, third most important… but nineth.

So, stop obsessing over how you can slash your prices. Instead, create and price your products at a premium. Then, deliver an awesome customer experience. That is how you will become the Apple of your industry.  

Check out my two-step process that will help you do just that:

1. Create a brand that is irreplaceable.

Many new entrepreneurs make the mistake of comparing themselves with their competitors, when they should be focusing on their company instead. Any competitor can come in and copy your products, or try to outprice you. (Patents don’t necessarily make you safe, because there are ways to get around these.) But if you dominate  a niche,  your customers will remember you easier.

Here’s an example: popular Chinese phone manufacturer Oppo blatantly copies Apple’s iPhone designs, and sells lookalikes at significantly lower prices. How did Apple respond? Did they come up with new designs? Overhaul their product line? Cut their prices? Nope, none of the above. Apple’s strategy was to stick to its guns, and continue selling its products at a premium. This paid off handsomely – despite fierce competition from Oppo (and other Chinese smartphone brands), Apple still dominated in terms of profit.

When I started my business a decade ago, I knew that we had to go niche as well. It didn’t make sense for us to try to cater to everyone. Instead, I made the call to focus on higher ticket jobs (such as custom garage doors), and turn down cheap assignments. Today, we’re known as a premium garage door service, and our reputation speaks for itself.

Take a minute to reflect on your company and ask yourself: What is the one thing you want your brand to be known for, which you know no one can deliver as well as you can?

2. Create a killer customer experience.

Once you nail your branding, follow through with a killer customer experience. Here’s the harsh reality of things: it’s simply not enough to sell high quality products. Heck, if that was all there is to running a successful business, Apple wouldn’t exist today.

Apple clearly knows that people buy experiences, not products. From the iPhone product box to the people they hire to staff the Apple physical store, Apple deliberately designs a customer experience that exceeds customer expectations. Not only that, Apple staff go through 10 days of Apple’s “Core” program, 10 more days of Apple Bootcamp, and then finally, a shadowing program in which they learn hands-on from a veteran employee.

At our company, we also train our employees to prioritize our customer’s experience. One thing our employees always do do is to take our time to talk with the customer even after we’re done with installations. This helps us make sure the customer is happy with our service. In addition to this, we also follow up with our customers based on the CRM data we have on hand (checking to see if the door we previously installed for them needs a repair, etc.)

Here’s an easy way to get ideas which will help you improve your customers’ experience: Ask yourself, what could you do to get your customer to leave you a 5-star review?

A few final words

You don’t need to compete on price. You don’t even need to compete with your competitors. What you need to do is do a great job with your branding and customer experience. Then, watch your profits skyrocket. It won’t happen overnight, but once you’re the Apple of your industry, you will thank yourself for all the hard work.


Alphabet's CapitalG leads Lyft's latest $1 billion funding

(Reuters) – Lyft Inc has raised $ 1 billion in fresh financing, the ride-services company said on Thursday, in a round led by one of Alphabet Inc’s (GOOGL.O) investment funds, further complicating the convoluted world of ride-hailing alliances and dealing a blow to rival Uber Technologies Inc.

The round was led by CapitalG, the growth investment fund of Alphabet that has also backed large tech companies such as home-renting platform Airbnb and payments firm Stripe. Six months ago, Lyft raised a $ 600 million from a conglomeration of investors. Lyft said the latest round boosts its valuation to $ 11 billion from $ 7.5 billion.

Reuters in September reported investment talks between the companies.

CapitalG partner David Lawee will join the company’s board, Lyft said, bringing it to a total of 10 directors. (

“Ridesharing is still in its early days and we look forward to seeing Lyft continue its impressive growth,” Lawee said in a statement.

Lyft, which runs a distant second to Uber [UBER.UL] in both size and valuation, has pushed expansion this year, adding more than 100 new cities since January. It says it is available across 41 states and is completing more than a million rides a day.

Lyft and Alphabet already have a relationship through a partnership Lyft struck with Waymo, Alphabet’s self-driving car unit, in May. The two companies are collaborating on bringing autonomous vehicle technology to market, but they have not provided many details.

Spokespeople for Lyft and Alphabet have said the latest investment will not have any bearing on the Waymo partnership.

Alphabet also has ties to Uber through its second investment arm, GV, which backs young startups. GV invested in Uber in 2013 but has since had a strained relationship with the ride-hailing company, as Uber began to develop autonomous cars and compete directly with Alphabet. Last year, Alphabet executive David Drummond stepped down from the Uber board as the relationship soiled.

“It is another punch by Alphabet at Uber,” said Erik Gordon, an entrepreneurship expert at the University of Michigan’s Ross School of Business.

Lyft is close to hiring an initial public offering advisory firm, in the first concrete step by the company to become publicly listed, Reuters reported in September.

This funding round may delay Lyft’s IPO plans, as the capital will allow Lyft to continue growing its business privately.

“We will go public when it’s right for us,” said Lyft spokeswoman Alexandra LaManna.

Reporting by Heather Somerville in Los Angeles and Arjun Panchadar and Munsif Vengattil in Bengaluru; Editing by Bernard Orr and David Gregorio


Taiwan chipmaker TSMC's third-quarter net profit falls 7.1 percent, beats estimates

TAIPEI (Reuters) – Apple Inc supplier Taiwan Semiconductor Manufacturing Co Ltd on Thursday said net profit fell 7.1 percent in the three months through September, slightly better than analyst estimates.

The world’s largest contract chipmaker booked third-quarter profit of T$ 89.925 billion ($ 2.98 billion), from T$ 96.76 billion in the same period a year earlier. The result compared with the T$ 88.19 billion average of 21 analyst estimates, Thomson Reuters Eikon showed.

Revenue rose 1.5 percent from a year earlier to $ 8.32 billion, slightly better than the $ 8.12 billion to $ 8.22 billion forecast TSMC issued in July.

The results come just days before the chipmaker celebrates its 30th anniversary and about a week before pre-orders begin for Apple’s latest iPhones, which are widely expected to carry TSMC-made chips.

They are the first results since Chairman Morris Chang – widely regarded as the father of Taiwan’s chip industry – said he would retire in June. He will be succeeded by current co-Chief Executive Officer Mark Liu, leaving C.C. Wei as sole CEO.

Following his announcement in early October, Chang told Reuters that TSMC would increase capital spending by 5 to 10 percent over the next five years.

Just over a week earlier, TSMC said it would build a new fabrication plant in Taiwan.

Shares of TSMC closed up 1.5 percent ahead of the earnings announcement.

Reporting by Jess Macy Yu; Editing by Christopher Cushing


Pentagon chief asks Congress to not hinder cyber defense

WASHINGTON (Reuters) – U.S. Secretary of Defense James Mattis this week asked Congress to halt pending legislation that would compel the U.S. to alert foreign governments when the Pentagon has decided to combat certain cyber attacks, according to a letter sent to lawmakers.

The letter, sent to members of Congress on Tuesday and seen by Reuters, comes as lawmaker’s finalize the Department of Defense’s 2018 spending plan, also known as the National Defense Authorization Act for fiscal year 2018, or NDAA.

“The nature of cyber-attacks is ever evolving, and we need to maintain our ability to take decisive action against this increasingly dangerous threat,” Mattis wrote.

Language in a draft of the NDAA says that when a cyber attack transits a third party country’s infrastructure or relies upon its networks the U.S. should encourage that nation to take action to eliminate the threat. However, the draft NDAA say the U.S. reserves the right to act unilaterally if needed.

Mattis’ letter, dubbed the “heartburn” letter because it highlights the Pentagon’s concerns with the budget, has often been used by previous Pentagon chiefs to attempt to influence lawmakers’ legislation while it is still under consideration.

In the letter, Mattis repeated an earlier request to Congress that they consider closing bases in 2021, for an estimated savings of $ 2 billion annually. Congress, fearful of the economic impact from base closings in their districts, are generally not sympathetic to those efforts.

Mattis also said he opposed the formation of an additional military service dubbed Space Corps, which he called an “additional organizational layer.” Space Corps would be a new military branch and absorb the Air Force’s military efforts in space.

The U.S. Senate passed its version of a $ 700 billion defense policy bill in September backing President Donald Trump’s call for a bigger, stronger military but setting the stage for a battle over government spending levels.

The House of Representatives passed its version of the NDAA at a similar spending level in July.

The two versions are now being reconciled before Congress can consider a final version. A fight over spending is expected because Senate Democrats have vowed to block big increases in funds for the military if spending caps on non-defense programs are not eased as well.

The two versions of the bill increase military spending well beyond what current spending caps allow.

Reporting by Mike Stone; Editing by Chizu Nomiyama


Want to Work at Amazon? Here's How to Answer the Most Important Interview Questions

Is Amazon’s second North American headquarters coming to a city near you? Dozens of communities around North America are making their pitches this week–hoping to land a $ 5 billion complex and 50,000 new high-paying jobs.

If your city lands the new HQ, or if you’re willing to relocate even if it doesn’t, a career at Amazon might be worth looking into. So check out their current listings here, and prepare for their interviewing process.

Here’s some advice on how to do that–based on published discussions with Amazon executives and interviewers, and the experiences of people who have been through the process.

1. It’s not really about the questions

On message boards and social media forums, you’ll see a lot of people searching for the common interview questions that Amazon will ask. Of course, there are technical questions pertaining to every role, but many potential applicants seem to be obsessed with finding the cultural and hypothetical questions they might encounter.

The best advice? Don’t worry about it. It’s far better to focus on the answers that the interviewers will want to hear, regardless of what questions they ask.

While applicants largely have to sign nondisclosure agreements that make revealing the questions a breach, Amazon goes out of its way to explain the answers its interviewers want to hear. In fact, as we’ll see, they’ve even prepared a one-page cheat sheet of sorts, and published it on their jobs website.

2. The answer, always: Customer first, competition second

This comes direct from Jeff Wilke, the so-called “second most important Jeff at Amazon,” who is also the CEO of Amazon’s worldwide consumer business. In a recent interview with The Wall Street Journal, he was asked how he uses interview questions to gauge whether someone will be a good cultural fit at Amazon. His answer:

“In an interview situation, we use the leadership principles as a guide to help us evaluate whether somebody would fit in. There are lots of situations where you could decide to optimize for the customer or to get ahead of the competitor. We want to pay attention to competitors, but we obsess over customers. If I detect that they are too focused on competitors, they probably aren’t going to be a great fit.”

Here’s a link to the Amazon leadership principles; sure enough, it starts off with “Customer Obsession.” Even if you’re a bit cynical about whether Amazon practices this in reality, they’re telling you right upfront that this is what they want to aspire to. Again: “obsess over customers.”

3. What to say about decisions you don’t agree with

Somewhere in the interview process, perhaps many times, you’ll likely be confronted with a question about a time in your career when you thought your employer was headed in the wrong direction, and you had to decide how to react to that decision.

Your answer, assuming you want to be hired, should be that you first forcefully, respectfully objected–but that once the decision went against you, you fully committed to trying to make it happen. Maybe even use the phrase: “disagreed and (yet) committed.”

The second-to-last Amazon leadership principle? “Have Backbone; Disagree and commit.” My colleague Justin Bariso wrote about it earlier this year. And in that same Wall Street Journal article, Wilke seizes the chance to talk about how he “disagreed and committed” with Jeff Bezos about launching the Kindle.

I don’t know how many more times Amazon can tell you, but this is the answer they want to hear!

4. Demonstrate curiosity and hunger for growth

Amazon has an interesting category of employees called “bar raisers,” whose work as specialized interviewers, interviewing people in entirely different roles from their departments (but all in addition to their regular jobs). One of the human resources employees who helped create the program said that among its most important goals is to identify and reject one-dimensional applicants.

“You want someone who can adapt to new roles in the company, not just someone who can fill the role that’s vacant. It can be an expensive process because it takes longer, but think of how expensive it is to hire the wrong person,” the former Amazon HR employee, John Vlastelica, told the Wall Street Journal.

Lo and behold, these characteristics are woven throughout the Amazon leadership principles–from “Invent and Simplify” to “Learn and Be Curious.”

Again, maybe you’re skeptical about whether these principles really are deeply held within the company, but you’ll only learn that first hand if and when you accept a position. Until then, these are the values the company at least claims to aspire to–and the ones they want to hear you espouse in an interview.

5. Remember: they need you as much or more than you need them

It’s daunting applying for any job sometimes, but remember: When Amazon opens this new facility, it reportedly plans to hire 50,000 people. Some say that Austin, Texas is the frontrunner; if so, well, that’s a city of just under 1 million, meaning Amazon would apparently be trying to hire a workforce equal to 5 percent of the entire population of its new (second) home.

Statistically, if you land an interview for a non-warehouse job with Amazon, your odds of getting hired have been roughly 40 percent. (I’m basing this on an interview with Dave Clark, Amazon senior vice president, who said the company typically needs 75,000 interviews to hire 30,000 new workers.)

Even if those numbers are off slightly, the bottom line is that Amazon needs a ton of people. And as one (anonymous) bar raiser reported, “While recruiting, we consider the candidate as our customer and strive to make their interviewing experience delightful.”

6. Remember: you might not need (or want) them at all

This isn’t to throw shade on Amazon, but the company itself spends a ton of effort weeding out applicants who might be technically proficient, but not at all a fit culturally. As one business school professor put it, if an applicant finds the interviewing process off-putting, “that’s a probably a good sign that they don’t belong there.”

Thus, you’re probably doing yourself a favor if you realize this yourself and take yourself out of the running. Besides, if Amazon opens its second North American headquarters in your city, a lot of other opportunities will be created as well–maybe even the opportunity to start something of your own.


Startup Magic Leap raises half a billion in new funding

(Reuters) – Magic Leap, a well-funded and secretive startup, said on Tuesday it has raised $ 502 million in a new capital funding round led by Temasek Holdings [TEM.UL], an investment firm owned by the government of Singapore.

New investors in the latest series D funding also include EDBI, a Singapore-based global fund, Grupo Globo from Brazil, and Janus Henderson Investors, Magic Leap said in a statement. (

The new financing round comes as Magic Leap readies a long-awaited debut product, a headset that shows images overlaid against the real world, known as augmented reality.

According to a corporate filing earlier this month, the Florida-based startup was seeking to raise up to $ 1 billion in fresh funding.

Magic Leap said some existing investors were also part of the latest funding. They included Alibaba Group Holding Ltd, Fidelity Management and Research Co, Google LLC, J.P. Morgan Investment Management and T. Rowe Price Group Inc.

Bloomberg reported last month that Temasek was considering to participate in a new financing round of more than $ 500 million, valuing Magic Leap close to $ 6 billion.

Reporting by Aishwarya Venugopal in Bengaluru; Editing by Shounak Dasgupta


Colliers dumps Flexpods for Nutanix and Cohesity hyper-converged

Commercial property firm Colliers International has deployed Cohesity secondary storage and backup as support for a complete replacement of existing converged server/storage systems with Nutanix hyper-converged infrastructure.

Technical architect Paul Khosla calculates the move to Cohesity has saved a projected £300,000 in replacement storage area network (SAN) costs over the next three years, while backup windows have been cut from cumbersome nightly ones to less intrusive hourly incrementals.

The company has 4,500 Europe, Middle East and Africa (Emea) employees in 60 offices with predominantly SQL-based apps, web applications and some property management tools, for example.

Its IT infrastructure was previously based on NetApp FlexPod converged infrastructure with Hitachi Data Systems SAN capacity as secondary storage.

It is now 90% of the way through its transition to Nutanix at its Amsterdam datacentre, and 60% in London.

For now, it has retained VMware as its virtualisation platform, but plans to move to Nutanix’s Acropolis hypervisor (AHV) next year to save costs, said Khosla. When finished, there will be between 400 and 500 virtual machines.

“We took a decision to change to a fully hyper-converged infrastructure and are in the process of moving to Nutanix and decommissioning our HDS storage,” said Khosla.

“With hyper-converged, if we need more nodes we can buy one at a time and we know how much it will cost,” said Khosla. “There are far fewer points of management. Previously we had SuperMicro JBOD and Quantum tape to deal with. There were lots of things that could go wrong and needed to be looked after. Upgrades were very disruptive.”

At each location, it has deployed a Cohesity C2500 hyperconverged backup appliance with 90TB of capacity. This acts as secondary storage and has its own backup application to which data is protected.

Khosla estimated that deploying Cohesity has saved a potential £300,000 a year in SAN replacement costs. “If we didn’t do Cohesity and stuck with what we had we would have spent £300,000 in replacing the SAN and on upgrades, for example,” he said.

The company has also moved from a backup regime that would take most of each night to 90% of data being handled by hourly backups. Then 30 days’ worth is held locally on the Cohesity appliances and is shipped off every seven days to the Microsoft Azure cloud, which has replaced the firm’s tape infrastructure.

The Cohesity Data Platform consolidates secondary storage platforms on a distributed storage system that can scale out. Its target market aims at replacing backup software and the backup target, such as EMC Avamar and Data Domain.

It is a software product that comes in qualified white box Intel servers with flash and spinning disk HDD storage capacity. … …. …. …. …. …. …

As data is ingested, it then is replicated and distributed, with two replicas taken on a two-factor basis. Cohesity plans to roll out erasure coding as a data protection method, although that would use more storage resources. Unlimited snapshots can be taken.


Netflix Flying High – Can It Last?

Source: WGME

Netflix (NFLX) is in an interesting place because two recent developments have the company soaring from $ 177 per share on October 2 to about $ 195 per share as I write.

The two catalysts have been the announcement by some analysts that they see the company exceeding new subscriber expectations domestically and internationally while the company communicated it’ll be raising streaming prices for its customers with different plans.

That combination, assuming the increase in costs doesn’t generate more churn than expected, will continue to give the company momentum, which should remain in place at least until the end of 2017.

I draw that conclusion because the fourth quarter tends to be a good one for the streaming giant.

Also, we are not likely to see what the impact of the increase in pricing plans will be until the first quarter of 2018, which won’t be reported until April. If there is a meaningful decline in subscriptions, it’s probable the company will release that before the second-quarter earnings report so investors aren’t caught off guard.

For now, it looks like Netflix investors are going to enjoy a nice ride, although high expectations could turn to a negative if they fail to be met in the upcoming earnings report.

Subscriber outlook

The outlook for Netflix’s subscriber growth was upwardly revised by two analysts, which boosted optimism for the stock earlier in the week.

One came from UBS analyst Doug Mitchelson, who raised his 12-month price target, and the other from Piper Jaffray analyst Michael Olson, who focused on the third quarter, saying he sees domestic and international subscribers exceeding expectations.

Mitchelson said this in a note to investors:

“A strong third quarter performance this year without a big content release slate or new market launch should increase investor confidence in the size of the ultimate total addressable market, Netflix’s potential market share and its speed in getting there.”

Mitchelson could be correct, at least for the fourth quarter, where Netflix has waited to release a strong slate of original content.

Among them are season 2 of “The Crown,” “Bright,” season 2 of “Stranger Things,” “Mindhunter,” and “The Meyerowitz Stories (New and Selected).”

“The Crown” and “Bright” will be released in December 2017, with the rest scheduled for release in October.

All of this is in preparation for the historically robust holiday season where Netflix has enjoyed solid subscriber gains. With the new shows and looser wallets, Netflix obviously hopes consumers won’t pay too much attention to the fact they are now charging more than rivals Amazon (NASDAQ:AMZN) Prime and Hulu.

As for Olson, he said he drew his conclusion from “analyzing Google search trends.” Data showed domestic growth climbed about 16 percent in the third quarter while international subscribers soared by 71 percent over the same reporting period last year.

Olson said “the consensus outlook is 10.7% for U.S. subscriber growth and 42% for international subscriber growth.”

Streaming price increases

Netflix is increasing its streaming prices in several markets, including the U.S., the U.K., Germany and France. Earlier in the year it boosted prices for Scandinavian countries, Latin America and Canada.

In the U.S., it’s increasing the monthly charge from $ 10 for its most popular plan to $ 11 per month. This is the plan that allows programs to be watched on two different devices connected to the Internet at the same time. The plan that won’t be changed is the one that doesn’t include high-definition, and allows only one screen to be watched at any one time. That will remain at $ 8 per month.

The high-def or 4K plan in the U.S. is being increased from $ 12 to $ 14 per month.

Overall, Netflix has approximately 53 million U.S. subscribers.

In the U.K., its prices are being increased on standard and premium plans. The plan there for watching on two Internet-connected devices simultaneously has been increased from £7.49 to £7.99 per month, while its Ultra HD plan has been increased from £8.99 to £9.99 monthly. The increases for existing subscribers will start in November.

The company is also increasing prices in France and Germany for its standard and premium plans.

Major competitors of Netflix will have a price advantage for now, with Amazon Prime subscribers paying around $ 8.25 per month, or $ 99 annually, and Hulu subscribers paying $ 10 per month.

That leads me to wonder if Netflix may be trying to some degree to position itself as a premium streaming service to differentiate from its rivals, at least with its Standard and Premium plans.


One of the challenges from the beginning for Netflix and other streaming companies has been how they’ll differentiate in a market that in the beginning was primarily a commodity market, meaning companies were streaming old content from traditional media with little to set them apart from legacy companies and from one another as they made content streaming deals.

That of course meant there was little in the way of pricing power. That of course changed with the transition to paying for the production of original content. This is a major reason Netflix is increasing prices, as it wants to defend margins and earnings even as it commits more to original production projects.

RBC Capital Markets’ Mark Mahaney recently wrote this in a research note:

“We believe that Netflix’s pricing power has increased materially over the past few years as their content slate and technology has improved.”

If Netflix in fact does have pricing power, which has yet to be proven, it would suggest its original content is superior to Amazon’s and Hulu’s. While it has done all the politicking in Hollywood to secure awards, it’s not a given that it will translate into consumer acceptance of higher prices, or that consumers consider it must-have TV.

A factor in whether or not Netflix considers itself to have pricing power or a premium service in comparison to its major rivals is in how Amazon Prime and Hulu in particular respond. If they raise prices as well, it would mean they consider their content at least as good as Netflix’s. More importantly, it would signal to the market they’re confident in those assumptions.

I don’t see Amazon raising its Prime subscription price in response to this, although its commitment and focus on customer service for Prime members gives it the potential to raise prices without enduring significant churn. The problem for Amazon is the way it prices its plan, where the $ 99 per year has a psychological element to it, if it were to be raised above $ 100.

Amazon’s size and willingness to work with low margins could position it as a low-cost alternative that is perceived as at least equal to Netflix. Amazon Prime is more than only a streaming service, so it’s not really comparing apples to apples, although the market in general still uses Amazon’s streaming business as a key metric to compare against Netflix.

Where Netflix could get hurt by this, if its rivals keep their prices where they’re at, is if the economy starts to slow down and consumers are forced to make a decision on which services to use or keep.

If Netflix isn’t considered a premium service in their eyes and worth the higher price, it could take a hit that would be difficult to recover from if the next recession is a prolonged one.


In the short term, by which I mean the next couple of quarters, Netflix should enjoy some strength. The question is whether or not the robust expectations coming from analysts concerning subscriber numbers are accurate. The market assumes they are, and have bid up the share price of Netflix as a result. If they are overly optimistic, and the earnings report on October 16 disappoints in that regard, the share price will reverse direction, albeit not as much now that the company is increasing prices in key markets.

Netflix as earmarked about $ 6 billion for original programming in 2017, and that’s likely to increase going forward. This is a major reason for the increase in prices and why it is attempting to position itself as a major player with original programming.

Netflix garnered more Emmy nominations in 2017 than any other network, with the exception of HBO. That definitely provides a sense of being a premium network, and I think the company is counting on that perception limiting the amount of churn coming as a result of raising prices. Again, it’s also why it timed the announcement right before the busy holiday shopping season, and why it is releasing so many original shows in the last quarter.

With the addition of relatively new streaming competitors like YouTube (NASDAQ:GOOG) (NASDAQ:GOOGL) and likely Apple (NASDAQ:AAPL), along with streaming offerings from legacy media, it’s becoming a crowded field, and Netflix will have to continue to release original content that resonates well with its subscribers in order to justify its price increases and maintain and grow its customer base.

Momentum should carry Netflix for the next couple of quarters, unless subscriber numbers aren’t as strong as the market is now looking for. Assuming they are, the share price should eventually jump above the $ 200 per share mark, and when it does, that in itself will be a catalyst to push it higher.

One concern I have is that Netflix believes its improvements in service justifies its price increase. I think it’s wrong there. I’ve heard that argument from Comcast (NASDAQ:CMCSA) for a long time, and consumers deservedly consider it among the worst in customer service.

In other words, how customers view the increase in services will determine the level of acceptance. The carnage in 2011 after the price increase shows this isn’t guaranteed to be something its customers accept. That was different because of the changes going on from physical disks to streaming transitions, but it still showed its users weren’t so committed they wouldn’t abandon the service in droves.

That probably won’t happen this time around, but it can’t completely be ruled out.

My view is it’s going to be all about perception, and if Netflix has successfully positioned itself as a premium network in the minds of its customers, similar to HBO, it probably shouldn’t have too much problem with this.

On the other hand, if customers consider it to be similar to Amazon Prime and Hulu in value, there may be more of an uprising and abandonment of the service than the market expects.

Since it’ll take some time before we find out the response of consumers to the price increase, I still think Netflix will do well over the next couple of quarters. Once the numbers come in concerning churn, which probably won’t be significant until after the first quarter of 2018, we won’t really know what revenue will look like for the company going forward.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.


Laugh-Out-Loud Lawsuit Insists Serving Coffee in a Bikini Is a Constitutional Right

Sometimes a news story is so complete in its absurdity that it’s hard to be on anyone’s side. That’s the only way to see the current legal battle between the City of Everett, Washington, and a group of young women who make their livings whooshing out pumpkin spice lattes while customers ogle their barely-covered bodies.

If you’ve ever been in the Pacific Northwest, you’ve seen the drive-up coffee kiosks in the parking lots of nearly every strip mall. It’s a super-inexpensive path to entrepreneurship–I’ve seen these kiosks for sale for only $ 20,000. No larger than the average coat closet, each kiosk contains a single server and an espresso machine.

With so many kiosks everywhere, competition is fierce and owners look for creative ways to stand out. Some offer a range of surprising add-ins (Nutella is my favorite). Some also sell unexpected food items, such as biscuits and gravy. Others hand out free biscotti, or freshly-made donut holes, or dog biscuits for canine passengers.

So it’s a no-brainer that some kiosks seek to woo customers with scantily-clad baristas. Since most kiosks have big windows in all directions, it’s almost a low-level peep show you get free with your hot beverage.

That’s where the trouble begins. Eight years ago–after a lengthy undercover investigation in a town that has plenty of other problems–five Everett bikini baristas were arrested and charged with prostitution because they accepted money for such things as a “whipped cream show” (two baristas lick whipped cream off each other) and “basketball” (in which customers throw money that the baristas catch in their underwear).

Since then, the city has tried to contain the baristas using its lewd conduct laws, which Assistant City Attorney Ramsey Ramerman, claims was “simply ineffective.” And so the Everett City Council unanimously passed a law requiring baristas and all other fast food servers to wear clothing that covers “minimum body areas.” It continues:

“Such clothing shall not be see-through and must fit adequately so that undergarments and all minimum body areas remain covered at all times including when the wearer is sitting, standing, bending reaching or performing other work duties.”

Wondering what constitutes a “minimum body area”? Never fear–the City Council has provided a definition:

“‘Minimum body areas’ means the upper and lower body (breast/pectorals, stomach, back below the shoulder blades, buttocks, top three inches of leg below the buttocks, pubic area and genitals).”

For good measure, Everett also enacted a city-wide code defining a lewd act (among other things) as:

“1. An exposure or display of one’s genitals, anus, bottom one-half of the anal cleft, or any portion of the areola or nipple of the female breast; or

2. An exposure of more than one-half of the part of the female breast located below the top of the areola; provided, that the covered area shall be covered by opaque material and coverage shall be contiguous to the areola.”

Just to be extra clear, it added:

“Body paint is not ‘opaque material.'”

These patently silly laws were met with an even sillier lawsuit by seven bikini baristas and one kiosk owner. Not satisfied with challenging the laws on the grounds of restraint of trade or fairness–servers in restaurants and private clubs aren’t included–attorneys for this group went straight for the First Amendment, arguing that the right to expose most of one’s skin constitutes self-expression.

As the Seattle alternative weekly The Stranger puts it, the free speech arguments in the complaint are “absurd in the lengths they go to avoid saying bikini baristas are meant to serve horny people.”

For example, it says this about the baristas and their bikinis:

“They express messages of freedom, openness, acceptance, empowerment, and individuality. By exposing who they are as people through tattoos, scars, and the bikinis that they choose to wear, the Baristas exchange conversations with customers about life experiences, personal choices, and other topics that would not otherwise occur. The Baristas cannot express these messages and prompt these discussions without the unique expression that wearing a bikini provides.”


“The Baristas use bikinis to portray a fun and happy-go-lucky image that gives customers a quick break from their daily lives. The bikini allows customers to imagine for a moment that they are relaxing at the beach or on vacation. The Baristas could not portray this message with another uniform.”

Not only that, the individual baristas explain what wearing a bikini means to them. Each repeats that the bikinis have nothing to do with sex and everything to do with empowerment. One explains that her bikini reveals scars from a childhood accident, which she talks to customers about and “they open up with their own stories.” Another says, “Millions of women fought for our rights and right to vote, and it’s my right to wear what I want.”

This is where the baristas lost me because the suffragists of 100 years ago went to prisons and workhouses and went on hunger strikes and endured the torture of having six-inch rubber hoses forced down their throats and nasal passages along with near-universal derision and disdain. I don’t think they went through all that out of a fervent hope that someday their female descendants would be empowered to serve coffee while wearing bikinis and playing “basketball” in the ostensible pursuit of self-expression, and the actual pursuit of larger tips.

I don’t want to be a killjoy, and neither should the City of Everett. Since the rule at most bikini stands seems to be that customers must remain in their cars, the worst that can likely result from most scantily-clad barista stands is the occasional whipped-cream show or fully nude coffee serving. In a city that’s also suing a pharmaceutical company over its rampant opioid problem, that just doesn’t seem like such a big deal.

Free speech, on the other hand, is a big deal. I’m not sure if the bikini baristas or their attorney noticed that they filed their complaint during Banned Books Week, an event that reminds us that classics from The Adventures of Huckleberry Finn to Toni Morrison’s Beloved and even The Diary of Anne Frank have been censored in American schools. All over the world, men and women risk their freedom, their health, and sometimes their lives for the right to write, film, or otherwise share the truth as they see it. That’s worth fighting and dying for. The right to show off the bottom half of one’s anal cleft? Not so much.


3D Printing is Changing the World One Hand at a Time. 3 Ways You Can, Too

If you believe some of the recent headlines, you’d think we’re heading for a dystopian future where technology takes over and robots rule. But keep reading and you will see a different story emerging; a story of what happens when entrepreneurs get creative with technology like 3D printing to create inspiring solutions that change people’s lives.

How do these innovation-infused social impact projects begin? Does it take a grand vision, a lengthy planning process, grant funding or a fairy godmother? Maybe that is the case for some. But for Enabling the Future, it began with an inventor-artist, a South African carpenter with a few missing fingers, and a boy named Liam.

Liam was born without a fully formed right hand. His mother saw an online video of a mechanical finger that was created by artist Ivan Owen for an inspired carpenter who saw an earlier video of puppet hand. Ivan said, “I made it and put on YouTube and didn’t expect anything to happen.”

But things did happen. As the volunteer project progressed, each step was met with challenges. It turns out for Liam and thousands of children around the world who share his reality the expense and lack of accessibility to materials, doctors and resources make prosthetics for most children completely out of reach. Add to the fact that growing children mean constant recalibration and fabrication and a solution seems hopeless.

Enter technology. Thanks to 3D printing, digital design, an insistence on an open source platform, a Google group, social media and an online mapping tool, Enabling the Future now has a growing community of more than 10,000 people and chapters around the world. A person can upload measurements on a Friday and have a 3D hand printed by a local builder by Monday. The story is released by Freethink Media on Facebook’s new “Watch” platform.

Given the impact of this organization, it is easy to forget that it began with one person exploring a single solution. Technology, enabled by inspired humans is a force that can change the world. Ivan says, “You don’t need a master plan. You need show up and put something into motion.”

So are you feeling motivated to start your own positive influence project? Here’s all you need to do to get started.

1. Put yourself out there

While it is fun to imagine what is possible, you don’t have to start with the end in mind. Ivan Owen set the wheels in motion for Enabling the Future simply by doing what he loves which includes “chasing the next thing that looks interesting and doing all sorts of weird and fun stuff.” He simply created a mechanical puppet hand and step-by-step, a movement to make prosthetics better and cheaper for everyone was born.

2. View barriers as your best friend

Innovation eats challenge for breakfast. It was only through the seemingly impossible task of designing prosthetics for growing kids that the process of 3D printing was considered. This technology democratized manufacturing, making the solution accessible to all. Because there was an openness to new and interesting solutions Enabling the Future can now “email a hand through space.”

3. Include others

“If enough people come on board, there is so much potential,” says Jen Owen, Beyond Impact’s wizard behind the curtain. Instead of guarding your idea, worrying about who may steal it or lawyering up, the team was able to quickly scale their impact. Today thousands of volunteers and recipients are connected and creating life-changing technology. “We’re not making hands, you are helping kids gain confidence.” It turns out that improving the lives of other people is a team sport.

Jen Owen sums it up best when she says, “I definitely didn’t expect the crazy things coming out of my garage would end of changing the lives of people in countries I haven’t even heard of.” By being present, flexible and open to possibilities, it is absolutely possible to create positive impact. So… how are you going to create your version? The world needs you to get started.