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Apple Best Retailer

I came across this article in Fortune which describes why Apple is the best retailer in America. Some interesting data points.

Saks generates sales of $362 per square foot a year. Best Buy stores turn $930. Tiffany takes in $2,666. Apple? Apple turns $4,032 per square foot.

Apple currently has 174 stores. They attract an average of 13,800 visitors a week. In 2004, Apple reached $1 billion in annual sales faster than any retailer in history; last year, sales reached $1 billion a quarter.

Sadly, there was no Apple store in Bermuda.

Apple Store

If Something Is Too Good To Be True

Gullible.

There are so many examples of fraud predicated on get rich quick schemes. I know of many people that get themselves involved in highly questionable business activities. And yet they remain hopelessly naive. Caught up in a dream that won’t come true. Unable to change course. Until their prized investment melts down. To nothing.

The example of Lydia Diamonds comes to mind. On their website they have the following disclaimer:

In no event shall Lydia, its directors, officers, employees, agents, advisors or website developers be liable for any loss of use, data, income or profits incidental, special, indirect or consequential or any similar losses or damages of any kind whatsoever, whether or not advised of the possibility of damages, and on any theory of liability, arising out of or in connection with the use of the information contained at this site.

The founders of the company, Emilia and Jurgen von Anhalt, have been convicted of 92 counts of contravening the Ontario Securities Act. They named their company after their daughter and they claimed royal titles from the former German principality of Saxony. They asked to be addressed as prince and princess.

The von Anhalts used a psychic to help hunt for diamonds near Madoc, Ont. About 350 shareholders handed their shares over to the psychic in trust after she allegedly “saw” diamonds on a map of the property.

The von Anhalts sold shares from personal holdings in Lydia for $1.58-million and improperly used shareholder funds for personal expenses.

There are hundreds, perhaps thousands, of shareholders left with worthless shares.

I cannot even fathom the stupidity of investing money in an enterprise where psychics are used to find diamonds.

However, there are many companies out there that operate at the same level as Lydia Diamonds. Companies that seek to take advantage of investors. Companies that promise individuals that they can get rich quickly. And then they exploit these people and take their money leaving them with nothing but a tragic lesson in life.

If something is too good to be true, it is too good to be true.

Project Overruns

I suppose Microsoft’s Vista is one example of a major project gone astray. You can get some interesting insight from one of the Microsoft folks here. Looks like programmer productivity at Microsoft is not all that it could be.

Microsoft is not alone. Airbus had a massive overrun as well. Over $6 billion due, in part, to project management issues.

Lots of other issues which allowed Boeing to leapfrog Airbus. Airbus had multiple and incompatible versions of their CAD app. Boeing enforced a single standard. Airbus struggled with all sorts of incompatible applications and data. Boeing used a suite of related apps from one vendor.

You can read the story here. Not all big projects go thud.

Take It To The Bank

This was included as part of a package of material that I had to review for a business offsite.

The letter, shown below, is an actual letter that was sent to a bank by a 96-year-old woman. The bank manager thought it amusing enough to have it published in the New York Times. I think it is splendid.

Dear Sir,

I am writing to thank you for bouncing my cheque with which I endeavored to pay my plumber last month.

By my calculations, three nano-seconds must have elapsed between his presenting the cheque and the arrival in my account of the funds needed to honor it. I refer, of course, to the automatic monthly deposit of my entire salary, an arrangement which, I admit, has been in place for only eight years.

You are to be commended for seizing that brief window of opportunity, and also for debiting my account $30 by way of penalty for the inconvenience caused to your bank.

My thankfulness springs from the manner in which this incident has caused me to rethink my errant financial ways. I noticed that whereas I personally attend to your telephone calls and letters, when I try to contact you, I am confronted by the impersonal, overcharging, pre-recorded, faceless entity which your bank has become.

From now on, I, like you, choose only to deal with a flesh-and-blood person. My mortgage and loan repayments will therefore and hereafter no longer be automatic, but will arrive at your bank, by cheque, addressed personally and confidentially to an employee at your bank whom you must nominate.

Be aware that it is an offence under the Postal Act for any other person to open such an envelope. Please find attached an Application Contact Status which I require your chosen employee to complete.

I am sorry it runs to eight pages, but in order that I know as much about him or her as your bank knows about me, there is no alternative.

Please note that all copies of his or her medical history must be countersigned by a Notary Public, and the mandatory details of his/her financial situation (income, debts, assets and liabilities) must be accompanied by documented proof.

In due course, I will issue your employee with a PIN number which he/she must quote in dealings with me.

I regret that it cannot be shorter than 28 digits but, again, I have modeled it on the number of button presses required of me to access my account balance on your phone bank service. As they say, imitation is the sincerest form of flattery.

Let me level the playing field even further. When you call me, press buttons as follows:

  1. To make an appointment to see me.
  2. To query a missing payment.
  3. To transfer the call to my living room in case I am there.
  4. To transfer the call to my bedroom in case I am sleeping.
  5. To transfer the call to my toilet in case I am attending to nature.
  6. To transfer the call to my mobile phone if I am not at home.
  7. To leave a message on my computer, a password to access my computer is required. Password will be communicated to you at a later date to the Authorized Contact.
  8. To return to the main menu and to listen to options 1 through 7.
  9. To make a general complaint or inquiry. The contact will then be put on hold, pending the attention of my automated answering service.

While this may, on occasion, involve a lengthy wait, uplifting music will play for the duration of the call.

Regrettably, but again following your example, I must also levy an establishment fee to cover the setting up of this new arrangement.

May I wish you a happy, if ever so slightly less prosperous New Year.

Your Humble Client

The letter was written by Peter Wear, a columnist for the Courier Mail in Brisbane, Australia, for that publication’s “Perspectives” column. The letter was a humour piece and it was never published in The New York Times.

Smartest Kids On The Block

Three Ontario communities ”“ Burlington, Ottawa-Gatineau and Waterloo ”“ are among the 21 smartest communities in the world, selected by the Intelligent Community Forum (ICF) based in New York city.

You can find the list here. Nope. Newmarket is not on the list. Neither is Toronto. But my two oldest kids are currently in Waterloo.

Where Work Is A Religion

The New York Times had a feature on burnout. The article can be found here. The subtext was interesting: in a culture where work can be a religion, burnout is its crisis of faith.

Ayala Pines is a researcher on burnout and sums up the problem as a failure of the existential quest ”” that moment when we wake up one morning and realize that what we”™re doing has appallingly little value.

iTune Sales Plummet

The National Post headline read: Sales Cut In Half: Revenue plummets 65% as consumers lose their appetite for Apple iTunes.

And with that news, spread broadly across the mainstream media, Apple stock dropped 3%.

The problem? The story is simply not true.

From the National Post:

Since January, 2006 the number of monthly iTunes transactions has declined 58%, while the average size per purchase declined by 17%, leading to a 65% overall drop in monthly iTunes revenue, U.S. market research group Forrester said in a survey among North American consumers.

National Post took the story from Reuters. Faced with numerous questions on the validity of the research, Forrester made a post on their blog to clarify their report. Here is an excerpt:

What an interesting couple of days it’s been. What follows is a case study in how information — and misinformation — spreads on the Net.

We put out a simple little report about iPods and iTunes based on credit card transactions and publicly stated Apple data. And for those who aren’t Forrester clients, I blogged the highlights. In case you are wondering, we ran the report by Apple, and they declined to comment.

Since then: – The New York Times ran a little fairly balanced pieced on the research. This got us on the media’s radar screen. Then . . . – A UK outfit called The Register and Bloomberg decided to dive in and highlight one finding of the report — that iTunes sales had dropped in the first six months of this year. We got treated to wonderful headlines about iTunes sales “collapsing” and “dropping” and “plummeting” and so on.

Now for the record, iTunes sales are not collapsing. Our credit card transaction data shows a real drop between the January post-holiday peak and the rest of the year, but with the number of transactions we counted it’s simply not possible to draw this conclusion . . . as we pointed out in the report. But that point was just too subtle to get into these articles. – Apple’s stock actually did plummet — 3%.

I started getting calls from hedge fund managers. Apple’s spokesman called and, although they refuse to go on the record with any facts, they’re clearly upset. And I also heard from the Chicago Tribune, San Francisco Chronicle, LA Times, Financial Times, Toronto Globe and Mail, thestreet.com, etc. At this point I was trying to get people off the “65% drop” idea and onto some of the more interesting ideas in the report, with mixed success.

Now, you can’t unring the bell. But I will try to focus you on the truth here, which is this: iTunes sales are leveling off, the Journal did an article about it last Friday with data from Soundscan. Apple is not in trouble — it makes its money mostly from iPods, and iTunes is just a way to make that experience better. It’s the music industry that has to worry, since the $1 billion a year or so from iTunes, globally, doesn’t nearly make up for even the drop in CD sales in the US, which are now down $2.5 billion from where they were.

The researcher from Forrester got another point wrong. This was not a case study on how information and misinformation spreads on the Net. This was a story that leaped over to the mainstream media. And, in the spirit of diligent journalism, the papers simply grabbed a news feed and printed it for effect. No validation. No investigation.

In other words, the mainstream media became a parrot.

Hydro One Insanity

Hydro One is one of the largest electricity and transmission systems in North America. Hydro One is owned by the peope of Ontario.

You can download a pdf of Hydro One’s Code of Conduct here. Integrity, excellence and citizenship are the principles Hydro One stands for. If, on the other hand, you are the CEO of Hydro One, duplicity, greed and ego are the principles you apparently stand for.

In our home, we have seen a dramatic increase in the cost of electricity over the past several years. So much so that we have been very careful in our consumption of electricity. And yet our hydro bill is loaded with charges beyond our direct consumption: delivery charges, regulatory charges, debt retirement charges. Our hope is that the company which manages these costs is as motivated as we are to be efficient and effective.

A false hope.

Tom Parkinson is the second Hydro One CEO in a row to lose a job over expense-account controversies.

How on earth can Hydro One justify a three million dollar severance for Tom Parkinson? He violated Hydro One’s Code of Conduct. By his actions and his leadership he promoted a culture where Hydro One employees were free to charge expenses without appropriate controls. In fact, he did the same thing for himself by having his secretary charge his expenses that he subsequently personally approved.

And, apparently with deep regret, and after the Auditor General’s report, the board decided to accept his resignation.

I’m sure the three million dollars will soften the blow for this “outstanding” leader.

Eleanor Clitheroe. Tom Parkinson. Can Hydro One find another leader willing to be fired for millions of dollars?

Submit your resume. Go work for Hydro One. Spend as much as you can. And, once you get caught by the Auditor General, quit for a few million dollars.

If you are interested, you can download the pdf of Auditor’s report on Hydro One here.

Hydro One CEO