AllThingsD » Costco

PaperKarma's Mobile App Tries to Eliminate Junk From Your Mailbox

Tricia Duryee — Thu, 09 Feb 2012 06:58:08 +0000

PaperKarma is a new app that helps you reduce the amount of unwanted coupons, catalogs and postcards that clog your mailbox.

Users download the app to their iOS, Android or Windows Phone device; register, and then start snapping photos of the unwanted mail.

Once a photo is taken, the user taps the “Unsubscribe Me” button, and then PaperKarma does the legwork.

Sean Mortazavi, the CEO and founder of PaperKarma, who also works full-time at Microsoft, has spent countless hours and weekends tracking down 10,000 of the biggest junk-mail offenders so that you don’t have to.

The only full-time employee PaperKarma has is Brendan Ribera, an engineer formerly from Urbanspoon and iLike. He is also co-founder. Currently, Mortazavi, who works on open-source projects in Microsoft’s Visual Studio division, is self-funding the project.

Mortazavi said more than 100 billion pieces of junk mail are sent every year in the U.S. alone, making it both time-consuming and a waste of natural resources.

The company already has a long list of companies in its database, but if users submit requests for something that isn’t on file, PaperKarma will use Amazon’s Mechanical Turk to track down the culprit. The Turk typically can track down people for hire at a reasonable price.

PaperKarma’s mobile apps, which are free, launched 10 days ago.

Mortazavi imagines being able to make money in the future by partnering with various businesses.

For instance, you may not want the flyer from Costco, but you may be willing to opt in for electronic coupons. PaperKarma could then charge the business for finding that customer, because it also would be saving them printing costs and mailing fees.

A couple of services like this already exist, but Mortazavi said it’s the first one to create a mobile solution.

Doxo and Earth Class Mail, two other Seattle companies, are addressing the problem in different ways.

Doxo encourages users to sign up for electronic communications with companies, which in turn saves those companies money. Earth Class Mail will accept all of your mail at its warehouses; if the mail is not junk, Earth Class Mail will open it, scan it, and send you an electronic version.

Nokia Lumia 710 Now Cheaper Than Cheap

John Paczkowski — Wed, 18 Jan 2012 16:14:34 +0000

Nokia’s Lumia 710 hasn’t even been at market a week, and already retailers are dropping its price — and drastically, too.

The device — currently the only Nokia Windows Phone available in the U.S. — had been selling for $49.99 with a two-year contract. But now Costco has dropped that price to a penny, with a qualifying two-year contract from T-Mobile USA. And rival Wal-Mart, not to be outdone, has reduced it to free, with the same contract.

Steep discounts like these are not uncommon at either store, even for new devices. That said, entry-level smartphone pricing doesn’t get much better than that. As a Nokia spokesperson told Dow Jones, “It certainly looks like an excellent deal for consumers.”

The Lumia 710 is being targeted at the market’s lower end, and it will be interesting to see how it fares, now that it’s such an easy buy. If it does well, it could begin to build up the much-diminished Nokia brand in the States, ahead of the launch of the high-end Lumia 900, which is headed to AT&T’s 4G LTE network.

VeriFone's CEO Explains Why It Spent $1 Billion on Acquisitions for a New Payments Strategy

Tricia Duryee — Wed, 30 Nov 2011 15:00:03 +0000

VeriFone, the largest maker of cash registers and other payment devices, has spent more than $1 billion on acquisitions to expand internationally and to go after new opportunities, such as mobile payments.

In an interview, Doug Bergeron explained to AllThingsD the reasoning behind the spending spree, saying that the company is undertaking a major transformation that requires selling software and services — not just hardware.

Only two weeks ago, VeriFone agreed to acquire Point, a major retail payment provider in Europe, for $817 million (not including $230 million in debt). Two weeks before that, it picked up Global Bay, a smaller company that helps retailers connect their e-commerce assets to physical stores through the use of iPads. Terms of the deal were not disclosed.

Additionally, a year ago, it agreed to buy payment security provider Hypercom in an all-stock transaction valued at about $485 million, including debt.

The three acquisitions easily push the company’s investment above $1 billion. A bet of this kind represents a substantial risk, but Bergeron believes the decision to turn into a services company was a no-brainer, even calling it “obvious.”

The San Jose company, which has about 3,000 employees globally, has a history of growing through acquisitions stretching back to 2005, so maybe it can pull it off. In its fiscal 2012, the publicly-held company is projecting it will make a profit of up to $2.50 a share on revenues of up to $1.72 billion before the Point merger is taken into account.

Earlier this year, VeriFone appeared on the defensive, after Bergeron attacked San Francisco-based Square for not providing encryption in its mobile card readers. Since then, Square has promised to add another layer of protection, although the rollout is still pending.

VeriFone now seems to be on the offensive, having figured out what role it will inhabit as mobile payments come increasingly into play. And despite Bergeron’s earlier outcry about Square, he says the company will play “the role of Switzerland,” and will be neutral about which technology will win.

In particular, VeriFone wants to be the software developer that makes all the new innovations — including Google Wallet, PayPal, ISIS, the carrier-led initiative and others – work with a retailer’s existing systems. Since retailers have limited resources for technology, he believes this will be an important role.

Here are excerpts from my interview with Bergeron, who is not modest in calculating the opportunity in front of VeriFone.

What was the thought process behind the acquisitions?

Broadly speaking, VeriFone has a very impressive market share at the point of sale, and now worldwide with Point. We see the most signficant dynamic shift taking place is the new complexity that’s hitting the point of sale as a result of all the innovation that’s taking place.

It means transforming VeriFone from a focus on the best in products to both products and services. We will be delivering payments as a service. Retailers want to take advantage of Google Wallet and the iPad, and brick-and-mortar stores want to connect with online stores through multichannel integration. But these retailers don’t have 100 people on staff capable of integrating. They can either be left behind and not participate, or they can reach out to a partner to co-manage the increasing complexity at the point of sale.

Global Bay is providing software for tablets that basically allows for integration with inventory systems and e-commerce solutions and other types of services that the market is going to demand. At the end of the day, the retailers don’t want to lose a sale, and if they have someone ready to buy something, like women’s apparel or jewelry or apparel of any type or home repairs, where there’s a dialogue in the store with the customer, they want to upsell or make sure they leave with more than they would otherwise.

Otherwise, it’s hard to compete with Amazon, which has massive distribution centers across the country. But if small or large retailers can leverage their corporate distribution centers, then they have an advantage over Amazon. They have the touch factor with the person [in the store]. It’s a new age that has arrived for multichannel retail, where brick-and-mortar meets e-commerce. That’s what Global Bay is doing so well.

So you are evolving from a hardware company to a services company?

I’m going to edit your question.

We don’t produce hardware. It’s manufactured by third partners, and our product comes out of a $130 million R&D budget, of which $110 million is software.

For VeriFone, 90 to 95 percent of revenue has been product, but over the past two years, we’ve stepped up our services business with encryption and content at the point of sale.

In the fourth quarter, the quarter we are about to report on, we are projecting that services will be 22 percent of our business, and that’s on top of the total business growing dramatically. By the end of 2015, we think we can get it to 50 percent.

With the Point acquisition, which is all services — or close to it, at 88 percent — we’ll now be in the low-30s percentage.

I’m pretty sure, but for the most simple requirements, we’ll say [to the retailer], here’s the products, here’s all the boxes, and then check all the boxes for things you want, like Google Wallet, encryption; or do you want to support gift cards, or multichannel sales through the Global Bay capability?

You have a good perspective on the wide range of mobile payments that are rolling out. How many of these technologies will make it?

What I don’t know is what are the next types of innovations coming out of the Valley or other places.

Everything looks good on YouTube, or in a standalone trial, but if you have to roll it out to thousands of stores — and 50 lanes in each store — whatever new that’s out there has to coexist with the old stuff.

Who’s going to do that and the integration, and who’s going to manage the software updates? It certainly can’t be the two guys in IT, because they don’t have the resources.

How slowly will these rollouts occur? When you put it that way, it seems impossible for retailers to adopt it very quickly.

I think things move deliberately, not slowly.

That’s a bit of a wake-up call to those who come out of the online world and think they can put some code up in the cloud and it works. But when you talk to Costco, Macy’s or McDonald’s, which are all our accounts, they are innovative. They’ve rolled out pin debit or cash back, but it goes through a process of quality assurance, and they have labs where they test all this stuff, and then methodically move it out.

National retailers will have to get on board. They are the ones that move mindshare. They want the same experience in every store in every city in every state, and to mass deploy that, it takes a fair amount of planning.

How many new providers will make it?

There’s no question there will be a few, but it’s not limitless.

There’s a limit to the amount of change and chaos that the important retailers are willing to deal with at any given time. I’m describing a situation why VeriFone is so important. They [the retailers] love the meetings with PayPal and Google and ISIS, but all of this stuff has to coexist together.

In a lot of ways, we are playing the role of Switzerland. We are supportive and encouraging of all the innovation. We are the systems-agnostic guys that are operating on behalf of the retailers.

But all of these things would require software. The things that Google is trying to accomplish integrates with back-office systems at the SKU level. If it was just throwing hardware at the problem, it’s one thing, but it’s software.

You’ve talked about the importance of Global Bay, but now let’s talk a little more about the Point. Why was that acquisition important?

The data is out there. It’s a company that has grown fivefold over the last eight years, and is precisely located in the geographies in Europe that are A) healthy, and B) prone to be the first movers of mobile payments.

That’s where the Point lives and breathes. They have massive market share using VeriFone solutions, and more than half a million merchants in Northern Europe and the U.K. are using them to manage services that are largely around keeping EMV, which stands for Europay, MasterCard and Visa, up to date. EMV uses chip technology instead of swipe technology like we do here in the U.S.

They took out all the complexity of managing EMV and provided them [retailers] a monthly managed service. It’s precisely that framework and model that will allow us to turn the lights on for PayPal and Google Wallet and other services. The Point has been very much ahead of the pack, rolling out NFC capabilities before retailers have asked for it. This can be very exciting for Google and others, because it can enable a rapid deployment capability for any of them.

Are you going to make any more acquisitions?

We are busy integrating right now. I don’t think you’ll see anything sizable for quite some time. For the most part, we are done with Hypercom, and waiting to do integration in January for the Point. For the most part, it will be independent. I think we have a lot of tools in the shed to help to find a new VeriFone.

OuchPad: Best Buy Sitting on a Pile of Unsold HP Tablets

Arik Hesseldahl — Wed, 17 Aug 2011 00:32:21 +0000

There have been plenty of hints that Hewlett-Packard’s TouchPad isn’t selling well. First there was a $50 discount. Then there were spot discounts of $100 at outlets like Costco. Then the $100 discount became permanent. Adding insult to apparent injury, a deal on Woot for $120 off an entry-level 16 gigabyte TouchPad netted all of 612 takers.

With HP set to report quarterly earnings tomorrow, sources familiar with the matter tell AllThingsD that TouchPad sales are failing yet another critical test: Sales at big-box consumer electronics retailer Best Buy.

According to one source who has seen internal HP reports, Best Buy has taken delivery of 270,000 TouchPads and has so far managed to sell only 25,000, or less than 10 percent of the units in its inventory.

A second person who has seen Best Buy’s TouchPad sales figures confirmed the results as “consistent with what I’ve seen,” and went so far as to say that 25,000 sold might be “charitable.” This source suggested that the 25,000-unit sales number may not account for units that consumers return to stores for a refund.

Best Buy, sources tell us, is so unhappy that it has told HP it is unwilling to pay for all the TouchPads taking up expensive space in its stores and warehouses, and wants HP to take them back. HP, for its part, is pleading with Best Buy to be patient. We’re also told that a senior HP executive, possibly executive VP Todd Bradley, is slated to travel to Minneapolis soon to discuss the matter with Best Buy executives.

These numbers are emerging just one day before HP is set to report quarterly earnings. While it’s possible that HP will choose not to disclose any unit-sales results for the TouchPad — because as yet they’re unlikely to be large enough to be material — if it does report anything on the subject, that will probably be a figure known in industry circles as “channel sales,” which are the number of units sold to stores like Best Buy and Costco. Channel sales don’t reflect sales to end customers, known as “sell-through.”

HP declined to comment, as did Best Buy.

There’s more. TouchPad sales aren’t only failing to catch on at Best Buy, but also at other retailers, including Wal-Mart, Micro Center and Fry’s, says analyst Rich Doherty, head of the Envisioneering Group. Doherty says that spot interviews at stores on both coasts show that HP’s “wildcat pricing moves” on the TouchPad have prompted consumers to wait and see what happens in the next few months.

“After the initial surge of interest after the July release, all those price promotions have caused consumers interested in buying a TouchPad to pause, because they think the price is going to fall further,” Doherty told me.

For the record, the TouchPad costs $399.99 for the 16GB model and $499.99 for the 32GB version. Both started at prices exactly $100 higher when first announced in June.

So what’s HP’s next move? Doherty says that with the back-to-school PC buying season underway, HP will likely use its leverage as one of Best Buy’s top suppliers — the other is Samsung — to offer bundle deals: Buy an HP computer, get the TouchPad for a special price.

HP's TouchPad Discounts Getting Even Deeper

Ina Fried — Thu, 04 Aug 2011 04:30:53 +0000

If the $50 discount on the HP TouchPad wasn’t telling enough, the WebOS tablet is now being offered in a few spots for $100 or more below its original price.

Earlier this week I noticed the 32GB model at Costco for $479 — $120 off the standard $599 price. Then, a few minutes ago, while watching ABC’s “Modern Family,” I caught an HP TouchPad ad touting that the entry-level model is being offered for $399 — a Benjamin Franklin less than the original asking price.

The fine print of the TV spot does say it is a limited-time offer running Friday through Sunday, while the Costco deal appears to run only through Friday. It remains to be seen whether HP needs to make the price drop permanent in order to compete with the iPad and other tablets on the market.

The TouchPad has faced significant criticism since going on sale last month, including complaints about its bulky design and lack of tablet-optimized apps. Earlier this week, HP released a free software update that it says fixes some early bugs and offers performance enhancements.

HP had initially priced its two models at the same price as Apple iPads with comparable memory. In addition to the iPad, HP’s TouchPad finds itself competing against the RIM PlayBook and a slew of Android-based slates.

I’ve reached out to HP to see if it will comment on the new discounts and on how sales have been going.

Update: HP declined to comment on TouchPad sales, but had this to say about the discounts.

“HP regularly announces promotions in-line with seasonal opportunities. The HP TouchPad with webOS is a productivity workhorse that is perfect for any student looking to multitask, remain connected in the classroom and out, and browse thousands of apps from the App Catalog. We’re excited to offer the promotion and deepen our commitment to deliver competitive products at competitive prices.”

A Day in the Life of a Salesperson on the Front Lines of the Group-Buying Frenzy

Tricia Duryee — Mon, 02 May 2011 10:30:53 +0000

Groupon and LivingSocial have ballooned into major corporations over the past year, hiring thousands of local salespeople who try to convince local merchants into participating in the latest fad: group buying.

While other sales positions have been hit hard by the recession, ranging from newspaper reps to real estate agents, it turns out not every one is losing out.

Fueled by hundreds of millions in capital and real revenues, the daily deal phenomenon is creating thousands of new sales opportunities–and the competition is heating up for trained workers with the contacts and experience.

Founded in 2007, LivingSocial has 1,350 total employees and Groupon, which has only been around since 2008, has more than 7,000. That’s not including all of the copycats, which also must hire local representatives in order to be live in a particular market. National providers are also flooding into the space, including well-established companies like Google, Facebook and Yelp.

But these aren’t the stereotypical door-to-door salesmen with briefcases full of samples. They carry iPads loaded with flashy presentations and are pitching something entirely new.

They are trying to sell local restaurants, spas, and yoga studios on the idea that in exchange for offering a steep discount, new customers will walk in their doors.

The frothy local sales market has been noticeable for Jessie Burrough and Harry Jigamian.

Burrough joined LivingSocial more than a year ago, becoming the company’s 24th employee after working as a commercial real estate broker for years. She is now responsible for some of the trendiest and most-trafficked neighborhoods in Seattle.

“It’s super fun, and it’s exciting when you believe in what you are selling. I remember thinking, this is a no-brainer, and that it is so easy to sell. I loved the idea,” she said.

For Jigamian, the decision was also easy, though he’d never heard of LivingSocial before they approached him.

He was a newspaper sales rep for the online-only Seattle Post-Intelligencer. He now oversees LivingSocial’s local sales office as general manager. “I did not know what LivingSocial was, but I knew that online was where everything was going. Now the only two questions are, ‘Where does it go from here, and how high does it go?’ It was all too much to say no to.”

If you aren’t familiar, companies like LivingSocial and its larger competitor, Groupon, offer a voucher for a steep discount, usually amounting to 50 percent off. Customers pay upfront for the coupon. Half of that revenue goes to LivingSocial, and the other half goes to the advertiser, who will end up making 25 percent on the overall transaction.

Normally, deals aren’t valid until a certain number are sold, sort of like buying bulk at Costco. That’s where the “group-buying” term comes from.

While it’s a large chunk to swallow, the daily deal companies want merchants to look at it as akin to placing an ad in the newspaper–except instead of hoping people see the ad and come into your establishment, you will know exactly how many people paid for one and how many redeem it.

Mostly, the focus has been on local commerce; increasingly, it’s expanding into national brands and advertisers, opening the door to nationally-focused sales people as well. (In a separate post today, I wrote about LivingSocial’s latest nationwide promotion on flowers for FTD.com after its prior offer on Groupon failed.)

Mitch Spolan, SVP National Sales for LivingSocial, said he decided to leave his job at Yahoo and join LivingSocial because, with group buying, “there’s no modeling and no guessing. You know when someone buys a voucher that they are fundamentally buying a ticket to come in and see that store.” As Spolan helps to build out LivingSocial’s national sales team, he says the concept makes it easy to recruit. “The sales people understand that. There’s such a desire to be in this space.”

Still, closing a sale can be difficult on the national or local level.

Some merchants have been burned after selling thousands of vouchers, and then losing money on every customer who walks in the door. For a small retailer with low margins, it can run them out of business.

Here’s a look at a day in the life of Burrough and Jigamian as they make two sales calls, and a video in which they explain how they got into the business.

[ See post to watch video ]

The first stop was at a restaurant called Re:Public, located in the hip new South Lake Union neighborhood that is being revitalized by Microsoft Millionarie Paul Allen, but has been slow to take off. Their second stop was at the Garage, a warehouse on Seattle’s alternative Capitol Hill, which has been converted into an over-21 pool hall and bowling alley.

Re:public, which is not yet a year old, has never done a daily deal before, but the Garage was a veteran of the process, having participated in a LivingSocial voucher a year ago and experimenting with a handful of smaller competitors since. It has not worked with Groupon.

Re:Public

On an early afternoon, before the happy-hour crowds start to filter into the bar and restaurant that serves upscale dishes like grilled octopus and oxtail ragu, Burrough and Jigamian make an appointment to see co-owner Matt Greenup.

To get the conversation rolling, Burrough tries to get to know him by asking about the business.

Greenup explains that they were one of the first restaurants in an unestablished neighborhood. They opened before the streetcar ran from the downtown core and before Amazon.com relocated thousands of workers to new buildings nearby. It’s been hard, but they’ve also done a good job at filling its 115 seats in the early evening and on weekends. But not late at night when the vibe goes from upbeat to lowkey.

Enough about Re:Public. Now, Burrough introduces LivingSocial to Greenup.

On her iPad, she breezes through a presentation, moving from one slide to the next with the swipe of a finger. She keeps it light by joking that next she’ll be performing an interpretive dance routine. It’s a joke that makes this more of a friendly situation than a business meeting.

Some of the highlights:

We have 10-plus million subscribers.
We have 200,000 subscribers in Seattle.
Our subscribers are between the ages of 20 and 40 with extra money to spend.
You get a check from us in addition to 24 hours of exposure on our site.
You get great social media exposure through our “me plus three” offer, which encourages people to share a deal with others.

But Greenup has concerns.

Re:Public has stayed away from discounts because their food is one of their highest costs. ”It’s a financial decision for us as to whether we want to cut into our profits,” he said. “If five tables are getting 75 percent off, that’s a big difference in return.”

To resolve those fears, Burrough has solutions.

She said they could make dinner reservations mandatory to ensure that a large number of LivingSocial participants came in on the same night. The description could also encourage users to come late at night to fill empty tables.

Jigamian adds: “You are already offering discounts at happy hour.”

But the pressure stops there.

Burrough offers to keep in touch and to send some ideas to him over email.

The Garage

Now a hardened veteran of the process, owner Mike Bitondo was way beyond needing a flashy iPad presentation, and knew exactly what questions to ask.

Burrough acted as if they were friends who were catching up for the first time in awhile, and she had a lot to update him on with what’s changed over the past year at LivingSocial.

“We are better at managing the online redemption online,” she said.

Relieved to hear it, Bitondo said: “I’m sure that was the number one thing people asked for.” If only you could go back in time, he said, so that his 70 employees spread across six different bars wouldn’t have to continue manually checking off some of the 1,200 vouchers that still haven’t been redeemed.

“Only if you have a DeLorean,” she said with dead-pan humor.

Back to the future, she quickly adds that they do have smartphone apps, and secret shoppers who will report back on their experiences of being a patron. They also have free advice on how to update their Facebook page, or will even shoot a video for some of their best clients.

Overwhelmed by copycats calling him, Bitondo goes on a bit of a rant:

He’s heard from sites focused on families to ones that focus on giving back a percentage of the profits to good causes. The phone calls are nearly daily. “My big turn-off is that these people think they are geniuses, and that they have this really good idea. But in reality they want to take a large commission for sending out a mass email. It’s a transparent concept and they pretend to have this big facade about how great it is.”

Having said that, he’s willing to consider doing another deal in the slow season with someone he’s already dealt with. ”I have 40,000 square feet. It’s hard to fill a 1,200-person venue every day.”

He can only guess how many will sell this time now that LivingSocial is far less obscure. “I’m scared to think how much we might do this time,” he said.

For nearly a full day’s work, Burrough left empty-handed, but convinced that both would participate. The last we checked, she was still in discussions with Re:Public and The Garage with paperwork nearly completed for at least one of them.

It Was All Over When Steve Saw Those iPods Next to the Mayonnaise Kegs

John Paczkowski — Thu, 09 Dec 2010 20:31:04 +0000

As tactics go, Apple’s decision to end its partnership with Costco is quite a bit less surprising than its decision to work with the warehouse chain in the first place. The Seattle Times reports that the retailer is slowly phasing out sales of iPods and iTunes gift cards. Said Costco CFO Richard Galanti, “In the past couple months, we agreed to wind down.”

The two companies’ arrangement has been stagnant for some time now, and while it’s not clear what exactly brought it to an end, it seems reasonable to assume that the retailer’s exclusion from a series of distribution deals that brought the iPhone and iPad to Target and Wal-Mart may have had something to do with it.

Windows Phone 7 Prices Quietly Dropping

Ina Fried — Thu, 09 Dec 2010 14:45:19 +0000

Although the official prices of the initial Windows Phone 7 devices remain the same, various promotions are heavily discounting the month-old models, with Amazon offering three AT&T models for just a penny.

The Samsung Focus, HTC Surround and LG Quantum are all priced at a penny with a new activation, while T-Mobile’s HTC HD7 is listed on Amazon for $139.

Other retailers are also offering discounts, though not as steep. I’ve seen models at Costco and Target for half their suggested $199 price, while Best Buy’s Web site lists both the HD7 and HTC Surround for $99. Retailer LetsTalk.com has two models for $49 each and another for $99, after rebates. AT&T and T-Mobile are also offering nationwide promotions allowing those paying full price to buy one and get a second one free.

In fairness, this is the holiday season and lots of phones are seeing discounts. Best Buy is running promotions that offer lots of different smartphones for free–not just those running an operating system from Redmond. And Amazon has lots of other cheap phones, including Android models as low as a penny and had previously put a bunch of AT&T phones–including some Windows Phones–on sale for a penny (though that was only for a weekend).

Still, such sharp cuts probably aren’t an encouraging sign for phones that have been on the market barely a month. Phones–at least those other than the iPhone–typically get discounted at some point. However, hit devices tend to maintain their initial price longer, while those that are less successful tend to get a price chop sooner.

For its part, Microsoft has said it is happy with Windows Phone 7 sales, as has AT&T, though neither has shared any actual numbers on device sales.

“We’re very happy with the rate of sales given the fact we’ve taken such a significant reset from Windows Mobile to a brand-new Windows Phone,” Microsoft’s Joe Belfiore told Mobilized in a interview following his onstage appearance at this week’s D: Dive Into Mobile. “We need people to get reacquainted with what we’re offering.”

And, of course, all these discounts may well boost total sales volumes.

A Microsoft representative declined to comment on the various price drops.

EBay CEO John Donahoe at D8: More Mobile Shopping and Payment Options

John Paczkowski — Wed, 02 Jun 2010 18:25:09 +0000

A few years back, John Donahoe’s position was an unenviable one. As incoming CEO of eBay, he was taking the reins of a company that, while the clear leader in the online auction space, had seen growth stall amid increased competition from formidable rivals like Amazon.com, as well as from upstart auction sites like Etsy. And his first efforts to reinvigorate the company’s business by tweaking its marketplace and auction listings to be more like Amazon’s met with some vociferous blowback from eBay’s core sellers.

But much as they irritated, those changes seem to have had a positive effect on eBay’s business. In its most recent quarter, eBay (EBAY) showed modest growth, narrowly beating analysts’ estimates thanks to some impressive growth in its PayPal online payment business. Add to this Donahoe’s unloading of most of Internet calling service Skype, a much criticized acquisition engineered by his predecessor, Meg Whitman, and his revamp of the company seems to be gaining momentum. But is it enough to reinvigorate eBay’s business and fend off Amazon (AMZN)?

Liveblog

11:31 am: A first question from Walt. You’re viewed by people as a sort of Web 1.0 company, and you’re all about auctions. Today you seem to be morphing into more of a no-haggle auction store, a buy-it-now venture.

Donahoe: We’ll never be a retailer. Initially, eBay started selling long-tail inventory and they sold it in an auction format and that made sense at the time. Today, eBay is 30-35 percent auctions. A lot of the inventory on eBay today is brand new. Now they’re not necessarily the same items you’d get in a retail store….But what you have on eBay that you don’t have anywhere else are items that have been returned or refurbished, items that are cheaper. EBay gives you a choice of inventory.

11:36 am: Walt–Do consumers get that? Do they understand that you’re only 30 percent auctions now?

Donahoe says they do. “I think perception does lag reality; I think there’s more inventory than people are aware of, but we’re correcting that….What eBay is very good for is if you have bulk inventory, we’re a good way to get rid of it.”

11:37 am: Walt asks about eBay’s other businesses: PayPal and Skype. Skype seems to be bigger than ever these days. Why couldn’t you make that work?

Donahoe says Skype is a fantastic business. But the challenge was one of focus. “In the Internet today, you can’t be all things to all people….And we didn’t have synergies with Skype…so we sold a portion of it.”

Walt–Well if there wasn’t synergy, why did you buy it?

Donahoe says that at the time eBay made the purchase there appeared to be synergies and the company hoped to make good use of its technology, but that didn’t quite pan out. “I’m not sorry we made the acquisition,” he said. “And I’m not sorry we divested it either.”

11:41 am: What’s the point of PayPal, asks Walt.

Donahoe: What PayPal’s done is to provide consumers with a safe way to make purchases online.

Walt jumps in and notes that it’s just as easy these days for people to use their credit cards. So why bother with PayPal?

Donahoe notes that things like cash and credit cards can be lost. PayPal cannot. “It’s a digital wallet,” he says, adding that he expects mobile payments to come into broad use within the next three years.

11:44 am: Continuing his riff on PayPal, Donahoe talks about the PayPal iPhone app, which allows people to “bump” payments to one another. “I think the idea of the digital wallet will facilitate digital commerce growth and PayPal’s growth as well.”

11:46 am: Walt–How big is your phishing problem? I get emails fairly often warning me that my PayPal account is in trouble for some reason. You are the target of a lot of phishing, aren’t you?

Donahoe: Phishing was an issue for eBay a few years ago. But over the last five years, we invested quite a bit of money fighting it, and I think we’ve done a good job.

11:48 am: Walt–So who’s your main competitor?

Donahoe says the usual suspects–Amazon, Etsy, Wal-Mart (WMT).

11:49 am: Donahoe–Wal-Mart is the largest offline retailer in the world. Costco (COST) competes in the exact same segment with the exact same business model very successfully. So does Target (TGT). The same thing can happen online. Amazon can be successful and eBay can be successful, too.

11:50 am: Is the iPad another big platform for you, Walt asks.

“I think more devices are becoming part of the shopping experience,” says Donahoe. The line between online and offline is blurring and I think these new devices are enabling that. He adds that he thinks eBay’s iPad app is the best eBay experience he’s seen to date.

11:52 am: A quick poll of the audience–Who has an iPad? Quite a few folks, evidently.

11:53 am: Walt–You say the iPad app is the best eBay experience, but this is a new device. You’ve been on the Web for years. Why isn’t that the best experience.

Donahoe: The core eBay Web experience–in the last few years we’ve gone from a [score of] 2 to a 4. But we’ve still got a long way to go, and we’re still focused on making it the best eBay experience in the world. But these new devices allow us to start over and make new customized applications that help us serve users in the way that they want to shop.

11:55 am: Why so much focus on fashion?

Donahoe says eBay is the largest seller of fashion in the world. What we’re doing is driving more vertical shopping experiences on eBay, he adds. We’re trying to offer more customized experiences in different categories.

11:56 am: Walt asks about StubHub. There’s a lot of controversy over the secondary ticket market.

Donahoe: StubHub is a marketplace. It never buys tickets. What it’s doing is enabling season ticket holders to resell the tickets they aren’t using. Sometimes for above-market prices, sometimes for below-market prices. What StubHub has done that the scalper market never could, is that it’s completely transparent. You know who the buyer is, who the seller is, and StubHub guarantees every purchase. It provides complete transparency.

Q & A

Q: Can you talk about PayPal’s role in paying for content?

A: Digital is going to be a big opportunity for PayPal. If you go on Facebook, you can buy game credits with PayPal. In the media world, we’ll have payment solutions such that content providers can have a PayPal button on their content and people can use it to purchase it. It will provide a seamless experience inside the content itself. Digital’s going to be a big opportunity.

Q: What do you tell sellers who feel they’re being nickel-and-dimed by eBay’s many fees?

A: I think for years, eBay was nickel and diming. But over the past few years, we’ve restructured our fees. Today, consumers can list for free and businesses can list in the fixed-priced format. We’ve tried to simplify and streamline our pricing. We’re still cheaper than Amazon.

Q: Why do my PayPal purchases default to my bank account when I’d like to use my credit card? Will you move toward a model where consumers can choose how they pay through PayPal?

A: Consumer choice is important to us, says Donahoe, adding that the vision is to offer multiple means of payment.

A note about our coverage: This liveblog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations written and posted to the Web as quickly as possible. It is not intended as a transcript and should not be interpreted as one.

Costco Pairs With Gazelle for Old Tech Trade-Ins

Geoffrey Fowler — Fri, 17 Jul 2009 22:37:16 +0000

Last week, Costco (COST) quietly rolled out a new partnership with Web site Gazelle to encourage its legions of discount shoppers to trade in their old technology for credit they can spend on new gadgets.

The Costco customer program works pretty much like the one that startup Gazelle has offered to everyone for about a year. Enter the make and model of your old gadget (say, a third-generation 8GB iPod Nano) into the Costco Gazelle Web site, and the company tells you how much cash they’ll give you for it ($47, as of Friday, July 17) if you put it in a box and mail it to them. Gazelle then resells your old gear on eBay (EBAY) and to wholesalers–or, if it’s really old, they’ll recycle it for the value of its tech innards.

Read the rest of this post on the original site

Microsoft "Done" With Yahoo Bid

John Paczkowski — Wed, 19 Nov 2008 19:00:24 +0000

[ See post to watch video ]

Microsoft "Done" With Yahoo Bid

John Paczkowski — Wed, 19 Nov 2008 19:00:24 +0000

[ See post to watch video ]

DOWn

John Paczkowski — Mon, 15 Sep 2008 18:00:49 +0000

[ See post to watch video ]

Accessing Email Without Web Access

Walter S. Mossberg — Thu, 07 Aug 2008 01:18:44 +0000

Here are a few questions I’ve received recently from people like you, and my answers. I have edited and restated the questions a bit, for readability.

My mother is 80 years old and would like to purchase a device whereby she can send and receive emails only. She does not surf the Internet. Do you have any suggestions?

Unfortunately, I don’t know of a simple gadget, like the now-discontinued MailStation, that just sends and receives emails. However, there is a service and device, aimed mainly at those seniors who aren’t comfortable with computers or smart phones, that allows the receipt of email, and even photo attachments. The drawback is that this system is one-way — users can receive email and pictures but can’t send emails.

The service is called Presto, and it uses a special Hewlett-Packard printer that connects to a phone line. Your mother would receive a Presto email address, and any emails and photos sent to her would materialize as printouts. A broadband connection is neither required, nor compatible. The device costs $100, and the service costs $100 a year, if paid on an annual basis, or $10 a month, if paid monthly. Information is at presto.com.

I have boxes and boxes of old photos, and about 20 home videotapes and old movies. Some of the photos are fading and showing wear, so I would like to find a company that can convert them to a DVD. Doing it at home would take too long. Have you reviewed such a company?

. Some years back, I reviewed and recommended a service called YesDVD, from a company called YesVideo, that converts videotapes, movie film and photos to DVD. It worked well in my tests. The service operates through retailers, such as Walgreens, CVS, Best Buy and Costco, where you drop off your materials and then later receive the DVD, plus your original stuff. More information is at yesvideo.com.

I enjoyed your review of Xobni. Will it work on Outlook Express or Entourage?

No. Xobni, which creates personal profiles and social networks from your stored email, doesn’t work with Microsoft Outlook Express for Windows or Microsoft Entourage for the Mac, or for any email program other than Microsoft Outlook 2003 or 2007, on computers running Windows XP or Windows Vista. The company is working on a version for Yahoo Mail.

You can find Mossberg’s Mailbox, and my other columns, online, free, at the new All Things Digital Web site, http://walt.allthingsd.com.

After Vote-Gate, Heads Must Roll on Yahoo's Board

Eric Jackson — Thu, 07 Aug 2008 00:00:50 +0000

To anyone who says that it’s inconsequential that Yahoo understated the level of shareholder dissatisfaction by more than half thanks to a “tabulation error” by its proxy counter, Broadridge Financial Solutions, I say: You couldn’t be more wrong.

This incident will have ramifications in the coming weeks for the composition of Yahoo’s board. But here’s the shocking thing: This latest batch of numbers might still underrepresent the level of disdain shareholders have for this board.

Any corporate election that doesn’t receive 95 to 98 percent support from shareholders for the incumbent management and board is an anomaly. Yahoo’s first press release from last Friday suggested that, despite all the hubbub of the failed merger talks with Microsoft and public criticism from Carl Icahn and others, Yahoo (YHOO) shareholders had let the incumbents off the hook.

Chairman Roy Bostock and CEO Jerry Yang were re-elected with 79.5 percent and 84 percent support respectively. These relatively benign results (compared to last year’s), combined with the fact that there were not more pointed questions at the meeting last week, led some observers to conclude that this board had “faced down” its critics.

Not quite. Gordon Crawford of Capital Research Global Investors did all Yahoo shareholders a favor by demanding a recount. Yahoo and Broadridge complied.

And results of that recount were alarmingly different from the first set of numbers. We’ve all heard of +/- 4 percent in polling, but when was the last time you heard of +/- 50 percent?

The recount might set a modern-day record among S&P 500 companies for the most “withhold” votes for a board in a corporate election. Only Vyomesh Joshi, head of Hewlett-Packard’s (HPQ) printer group, got off without a serious warning from shareholders (a 7.1 percent “withhold” vote).

The “withhold” vote for Bostock was 39.6 percent, not 20.5 percent as originally reported. And 33.7 percent of Yahoo shareholders withheld their support from Yang, not 14.6 percent.

Other Yahoo directors who fared poorly in the election were Gary Wilson (27.7 percent of votes withheld) and Compensation committee members Ronald Burkle (37.9 percent withheld) and Arthur Kern (31.7 percent withheld).

What would we all be doing today if Crawford had never called for a recount? If a “tabulation error” happens and no one is there to hear it, did it happen at all? We will never know.

And there will likely be more shoes to drop in this tragedy of errors. This “tabulation error” was only one of two major question marks surrounding last Friday’s initial voting results. Yahoo easily made Broadridge the fall guy for this first error.

The second error–how few eligible shares were counted in the final tally–isn’t so easily eluded. And for that, Yahoo will be the fall guy.

Only 75.8 percent of the eligible shares as of the June 3 record date were voted in this election. After such intense media scrutiny in the past few months, it seems odd that so few investors participated.

Last weekend, I dove into the numbers in detail and reviewed them against numbers from the last two Yahoo elections. On Sunday night I wrote about the most recent Yahoo shareholder vote and verified that there were 200 million fewer votes cast this year compared to the average over the last two years. I called on Yahoo to appoint an independent third party to review and certify the voting process.

Yesterday, as news of the voting irregularities circulated, I received a number of complaints from frustrated shareholders.

Some claimed they had received multiple proxies from Yahoo over the last month, with several arriving Aug. 4–the Monday after the election. Some said they had had trouble voting by phone. Others, who had initially voted for Icahn’s slate, said when they tried to re-vote against the Yahoo board, they weren’t able to do so.

How many other shareholders encountered similar difficulties? Without a full inquiry, we’ll never know.

These missing votes could have had an even more significant impact on the overall results. For example, Bostock received “for” votes from fewer than half of the total shares eligible to vote (only 45.8 percent of the 1.4 billion shares eligible to vote). He truly lacks the approval of the majority of the shareholders he is supposed to represent. With a 47 percent vote, Burkle also lacks majority support. And while Yang won majority support, he did so by the skin of his teeth, with just a 50.2 percent vote.

Governance Matters

At Friday’s meeting, I asked Yang, Yahoo President Sue Decker and Bostock about three issues that suggest to me that Yahoo’s governance oversight has been lax.

(1)

(2) Decker serves on three Fortune 500 boards: Intel (INTC), Costco (COST), and Berkshire Hathaway (BRK). Her duties to those companies required her to attend at least 22 meetings last year, according to proxy filings. And each meeting required significant preparation. As a Yahoo shareholder, I fail to see how outside commitments like these benefit Yahoo. Are they really necessary? Shouldn’t Decker drop a few of them until Yahoo finds solid footing again?

(3) About a third–31 to 36 percent–of Yahoo shareholders voted against the re-election of Roy Bostock and fellow Compensation Committee members Burkle and Kern last year. Yet all three continue to sit on this committee (or the board). Why? And why did they agree to pay outside directors average total compensation of $500,000 last year? Google’s (GOOG) outside directors were paid $250,000, on average, for their services last year. Decker received $2,700 for sitting on the Berkshire Hathaway board (and $110,000 per year for serving on the Intel and Costco boards). Why is Yahoo paying its directors so much?

I found the trio’s answers to these questions unconvincing. Particularly surprising were Bostock’s comments on Compensation Committee member tenure and compensation.

In the first place, Bostock said while 32 percent of shareholders voted against his reelection last year, 68 percent voted for him. And that’s not bad, he said. This glass-half-full logic explains why he has never bothered to explain to shareholders why he, Burkle and Kern have remained on the Compensation Committee and the Yahoo board.

Second, Bostock disputed my assertion that Yahoo’s outside directors were paid an average of $500,000 last year. When I asked him if he was definitively stating that he did not receive compensation of about $500,000 last year, he said “yes.” Yet, according to Yahoo’s own proxy statement, Bostock earned total compensation of $499,264 last year. 2007 compensation for Yahoo’s other board members was as follows:

Ronald Burkle: $482,046
Eric Hippeau: $496,674
Vyomesh Joshi: $519,520
Arthur Kern: $496,990
Robert Kotick: $492,774
Edward Kozel: $516,202
Mary Agnes Wilderotter: $205,832 (for five months of service; annualized $493,997)
Gary Wilson: $482,046

The average compensation for each Yahoo outside director in 2007: $497,531.

Third, Bostock also claimed that this year’s vote would be a far better indication of shareholder support for Yahoo’s Compensation Committee than last year. With 39.6 percent of shareholders withholding support from Bostock and 37.9 percent withholding it from Burkle, isn’t it time for them to step aside?

Fool Me Once, Shame on You; Fool Me Twice, Shame on Me

Given all this, I am deeply concerned that my interests and those of all Yahoo shareholders are not being protected by the company’s board.

We need to know why 200 million shares were missing from this year’s vote as compared to the last two years’.

We need to know why so many proxies were mailed late to shareholders (on our dime).

We need to know why so many shareholders are questioning whether their votes were counted.

Yahoo will try to sweep all these concerns under the rug, but we shouldn’t allow it. The company should immediately appoint an independent third party to address these questions and assure shareholders that their votes were properly counted.

Immediate Changes to the Board

Also, Yahoo needs to immediately make some changes to the composition of its board. Bostock and Burkle should do the honorable thing and step down from this board.

In truth, this should have happened a year ago. One wonders what might have happened in the last 12 months with Microsoft negotiations had Yahoo acted swiftly, following the 2007 annual meeting, to remove them.