Archive for May 1st, 2009

"If Japanese automakers can make a profitable hybid, why can't American automakers?"

May 1, 2009

That’s the question that President Obama posed in his 100 day press conference.

The answer: According to the Washington Post, they (the Japanese) can’t make a profitable hybrid — even the Prius loses money!  So, add on a few UAW work rules and legacy costs and you get a mega loss generator … probably supported by extensive government subsidies.

P.S. to President Obama — we didn’t invent the auto — the Germans did (ever hear of Mercedes Benz ?)

P.P.S. to Pres. Obama — hire a fact-checker

* * * * *

Excerpted from Washington Post, “The Car of the Future — but at What Cost?”, Steven Mufson, November 25, 2008

Hybrid Vehicles Are Popular, but Making Them Profitable Is a Challenge

Sen. Charles E. Schumer said last week. “We need a business model based on cars of the future, and we already know what that future is: the plug-in hybrid electric car. ”But the car company Schumer and other lawmakers envision for the future could turn out to be a money-losing operation, not part of a “sustainable U.S. auto industry.”

That’s because car manufacturers still haven’t figured out how to produce hybrid and plug-in vehicles cheaply enough to make money on them.

After a decade of relative success with its hybrid Prius, Toyota has sold about a million of the cars and is still widely believed by analysts to be losing money on each one sold.

U.S. lawmakers want the companies to produce automobiles of the future, using advanced technologies and featuring hybrid or plug-in vehicles. But there’s no guarantee that the new business model would be any more viable than the current one.

Automobile experts estimate that the battery in a plug-in vehicle could add at least $8,000 to the cost of a car, maybe considerably more. Most Americans will be unwilling to pay the extra price, especially if gasoline prices languish around $2 a gallon.

GM will have to stake its future on Malibus, the Chevy Cruze, and much more conventional technologies.

“Do you bet on lighter, smaller, more fuel efficient but ultimately less profitable cars or do you hold back a little on technology development and look at new versions of existing cars.

”Many experts say that gas guzzlers will not fade away as long as Congress fails to impose higher taxes on gasoline to steer people toward fuel-efficient cars.

GM and other car companies, while preparing plug-in vehicles, are more likely to live or die based on the sales of conventional cars that get better fuel efficiency through improved transmissions, reduced weight or hybrid technology.

”There’s fluff and there’s reality … The fluff is the Chevy Volt . . . That’s not going to save GM in the next five years. What will save GM is more small sedans and more crossovers. That’s what people are going to be buying.”

Full article:
http://www.washingtonpost.com/wp-dyn/content/article/2008/11/24/AR2008112403211.html?wpisrc=newsletter

* * * * *

Want more from the Homa Files?
Click link =>  The Homa Files Blog

Posted in Autos - Travel, Obama Administration | Leave a Comment »

One for the good guys who pay their mortgages … Senate blocks mortgage "cramdowns"

May 1, 2009

As loyal readers know, I’ve been opposed to mortgage cramdowns from the get-go. 

In essence, cramdowns reduce the principal owed on a mortgage based on a borrower’s ability to pay.  That is, if a guy took on a mortgage that he couldn’t afford and stops paying, then the lender would have to reduce the amount owed to fit the deadbeat’s budget.  A fundamentally wacky idea for lots or reasons.  Most notably, if lenders had to absorb principal risk on all mortgages, they would naturally just up the interest rates on all mortgages in order to cover the added risk.  In other words, good borrowers would end up subsidizing the deadbeats.

Team Obama was pushing aggressively for cramdowns — to slow foreclosures and spread the wealth (by having good borrowers subsidize bad borrowers).

According to the WSJ:

“Senate Republicans defeated the budget bankruptcy “cramdown” bill …that had easily passed the House and was one of President Obama’s housing priorities.

The cramdown would have allowed bankruptcy judges to rewrite contracts to reduce the amount that people owe on their mortgages. But a bipartisan majority understood that relief for today’s troubled borrowers would be paid with higher rates on the next generation of homeowners, as lenders priced the added risk into mortgage contracts.

Speaking for millions of renters and nondelinquent borrowers, Mr. McConnell said that the vote “ensures that homeowners who pay their bills and follow the rules won’t see an interest-rate hike at the whim of a bankruptcy judge.”

Full article:
http://online.wsj.com/article/SB124113493922575179.html

* * * * *

Want more from the Homa Files?
Click link =>  The Homa Files Blog

Posted in Mortgage Crisis, Obama Administration | Leave a Comment »

iTunes Price Strategy Shifts … Oh no, please don’t make me pay for the (bleep) tracks on the album.

May 1, 2009

Excerpted from WSJ, “Music Labels Push Extras with iTunes Pass” By Ethan Smith, Apr 15, 2009

* * * * *

Record companies, weary of scraping by on 99-cent song downloads and dwindling CD sales, are trying to dress up and reimagine their most profitable product — the album — to woo music fans on Apple Inc.’s iTunes Store.

On Tuesday, Sony Corp.’s Epic Records plans to release a $17 iTunes “pass” for pop band the Fray. The pass delivers songs, video footage and photos, but spaces out the offering over several weeks in the hope of holding consumers’ attention and justifying the premium price …

Apple plans several more subscription-style passes in the coming weeks.The offer is part of a broader strategy among record labels as they try to adapt to a retail landscape now dominated by the iTunes Store, which has become the world’s largest music retailer.

While iTunes has thrown the music industry a lifeline by getting listeners to pay for a product that many had been getting free via illegal file-sharing, it also has created a new set of problems for record labels. The vast majority of iTunes sales are for single-song downloads, while higher-priced album sales have dwindled. Record companies are desperate to find ways, including re-pricing songs, to hook consumers on bigger-ticket products that deliver higher margins.

The release of the Fray’s iTunes pass comes the same day that song prices on the iTunes Store are set for an overhaul. Instead of the longstanding across-the-board price of 99 cents, songs will be priced on a three-tiered system, with new releases or hits costing $1.29, and older tunes at 69 cents. Those occupying the middle ground will still cost 99 cents.

The four major-label groups have been calling for such a shift so they can make more money on their most sought-after releases. But even so, many in the recorded-music industry view consumers’ gravitation to song-by-song downloads as a major economic problem. Among other things, major labels can’t sustain their global marketing and physical distribution infrastructures with transactions that net them pennies apiece …

Though CD sales still account for around 80% of retail music sales in the U.S., they have fallen 20.3% this year alone … Adding in digitally downloaded albums, sales are down 13.5%, compounding a 45% decline in album sales since 2000 …

One downside to the pass idea: It’s something of a grab bag. Fans don’t know exactly what they’ll get. Still, the price isn’t that much more than the cost of many full albums …

Apple has begun offering fans other incentives to trade up from individual songs to full albums. A feature introduced in 2007 called “complete my album” allows a buyer to apply money spent on individual songs toward the cost of the full album it came from …

Eddy Cue, the Apple VP who oversees iTunes, says that “once [an album] gets out the door, you can’t update it, you can’t refresh it, you can’t do anything to it.” But the add-ons allow music companies to keep it new for a longer period.

Edit by SAC

* * * * *

Full Article:
http://online.wsj.com/article/SB123906011712694965.html

* * * * *

Want more from the Homa Files?
Click link => The Homa Files Blog

Posted in Mktg - Pricing | 1 Comment »

Nintendo Striking Back at iTunes … It’s No Game !

May 1, 2009

Excerpted from Washington Post, “Nintendo, Biting Back at iTunes”, by Mike Musgrove, April 5, 2009

* * * * *

Open up the latest portable game gadget from Nintendo, the DSi, and you’ll be able to log onto a new online store carrying a small catalogue of software titles. If you see one that grabs your interest, you can buy and download it to your device on the spot, with prices starting at $2.

This type of purchase probably doesn’t seem exotic any more, thanks largely to Apple. Apple’s App Store, which offers software for its iPhone and iPod Touch, has had 800 million downloads since it opened last summer. Now, other mobile gadgets like Nintendo’s DSi are quickly creating their own retail outlets on the Web.

* * * * *

Some see Apple’s online software store as having hit close to home for Nintendo, which has long dominated the mobile gaming market. The most popular category in Apple’s software store, after all, is entertainment-related software.

DSiWare is “basically a direct response to iTunes . . . Apple definitely came up and bit these guys on the rear end, and this is Nintendo striking back.”

In terms of downloadable content, Apple’s store offers almost 7,000 games. Nintendo’s DSi store launches today with five titles, not including a free Web browser that DSi users can download to their device.

Nintendo says the company has adopted a different strategy than the competition. Just about anybody who pays a fee and passes an inspection by Apple reviewers can sell his software on the iTunes store, but that’s not how Nintendo has approached this market. The roster of titles Nintendo approves for sale on the DSi store will be “more like the content you’ll find at a film festival”, as opposed to its competitors’ catalogues, which are “more akin to YouTube.”

Edit by DAF

* * * * *

Full article:
http://www.washingtonpost.com/wp-dyn/content/article/2009/04/04/AR2009040400098_pf.html 

* * * * *

Want more from the Homa Files?
Click link =>  The Homa Files Blog

* * * * *

Posted in Digital Media, Internet Marketing - eCommerce - | Leave a Comment »