Category Archives: Comm 101

From Needle Drop to…Dropout of iTunes?

Decades ago, before Frank Ocean, John Legend, and Spotify, there was Frank Sinatra, John Lennon, and dropping needles on vinyl records. The years between of going from buying albums at record stores to entering a credit card number for unlimited online music streaming is what Commerce 101 students call: “disruptive innovation.”

To see where the music retail industry is headed to in the near future, I was inspired by my classmate John Zhang’s blog on Netflix where it is seen how Netflix has grown to essentially becoming the entire film retail industry. Due to Netflix’s innovative entrance into the film retail industry, incumbent companies such as HMV and BlockBuster were displaced and ran out of business. With this background in mind, I believe that iTunes will also soon follow this path of these companies and become obsolete.

Historically, disruptive innovation in the music industry has done its fair share in sourcing the fall of incumbent music formats. Up until the 1980s, vinyl record companies such as Columbia and Atlantic Records dominated the music retail industry with their pricey and “skippy” records. Through the technological innovation of the CD however, music enthusiasts in the 1980s to 1990s were made able to purchase albums at prices that did not require an expensive turntable setup, this also came along with being able to listen on the go and without having to clean the discs like they had to with the “skippy” vinyl records. Through the CD, several of the incumbent vinyl record companies, similar to HMV and BlockBuster, were run out of business. In the early 2000s, with the introduction of iTunes music purchasing, CDs companies, similar to the vinyl record companies, were also knocked out of the race, and this brings us back to the present day with the innovation of online music streaming.

At the peak in 2012, iTunes music downloads generated $3.9 billion, since then, sales have been on the decline and is projected by independent music analyst Mark Mulligan to drop to a mere $600 million by 2019 as customers are drawn towards streaming services such as Spotify, Apple’s own Apple Music, and the newly launched Amazon Prime Music. Furthermore, my hypothesis that iTunes will soon become displaced is reinforced with the recent resurgence of CD and vinyl records collectors, as iTunes will not be able to offer customers the physical copy of the album as CD and records do, and not being able to offer the low flat rates of streaming services for unlimited music.

Word Count: 419

Sources:

http://www.claytonchristensen.com/key-concepts/

https://blogs.ubc.ca/johnzhang/2016/10/18/blog-post-3-netflix/

http://www.computerworld.com/article/3070416/apple-ios/the-end-of-itunes-music-sales-is-inevitable.html

http://www.timeslive.co.za/incoming/2013/04/05/record-player-vinyl-lp/ALTERNATES/crop_630x400/record+player+vinyl+LP

Mac Vs. PC Round 2016

At home, I use my Mac Desktop. On the road, I use my HP Laptop. That’s right, I am a supporter for both Apple and Windows.

Recently, I read Blaine Kyllo’s blog in The Georgia Straight where he wrote that in a span of two days in October, competitors Apple and Microsoft released two of their newest products, the new MacBook Pro by Apple, which has undergone its first major changes in four years, and the Surface Studio by Microsoft, which is the premium notebook in the extensive Microsoft Surface Series.

I found Blaine’s blog to be particularly insightful as it connected two separate major business news stories to showcase the differences in the notebooks and the competition between the customer base of Apple and Microsoft.

From Apple and Microsoft releasing new products at essentially the same time in a competition for sales, I personally drew connections that this timing has to do with giving customers more options of products to choose from, to hopefully break the “blind loyalty” as modeled in the consumer decision journey.

Since the inception of Apple, consumers have entered into this spiraling journey where their continual purchases for Apple products, whether they are newer iPhones or MacBooks, have been formed purely on blind loyalty, by being satisfied enough to not wanting to endure the research process again. In fact, a survey polled released on Forbes showed that 59% of 2,275 iPhone users “admitted to blind loyalty,” meaning that they continue to purchase lines of Apple products solely because they were previously satisfied with their older Apple product.

This may be interpreted as the reason that Apple for the past four years has ceased making notable changes to the MacBook Pro, knowing that their customers, being fully engaged in the repeating consumer decision journey, would buy the newer models regardless of any new changes.

On the flip side, Microsoft has been trailing Apple and the other competitors in the industry in terms of customer loyalty as shown in the following graph.

With Microsoft lacking the customer loyalty enjoyed by Apple, the company is put into a position in which one of its only ways to appeal to customers is to implement new changes in each model of the Surface Series, as opposed to the MacBook Pro, which has not undergone a major change in four years until now.

By the companies timing their product releases so closely together, one can interpret this their as efforts to draw customers towards their own companies and preventing them from repurchasing products from the competition in the blind loyalty cycle.

Word Count: 434

Sources:

http://www.forbes.com/sites/gordonkelly/2014/03/21/the-majority-of-iphone-users-admit-to-blind-loyalty-why-this-a-problem-for-apple/#4376ec02df62

http://www.straight.com/blogra/817607/apple-unveils-new-macbook-pro-microsoft-shows-surface-studio

http://betanews.com/2015/04/07/microsoft-vs-apple-which-has-the-most-loyal-and-satisfied-customers/

http://mashable.com/2016/04/23/surface-pro-4-vs-macbook/#CIRzOUHK2sqK

Happy Hour Special: Rum and Cigar

Ever since the Cuban Missile Crisis and the Cold War, economical and political relations between the democratic United States of America and communist Cuba have been severely strained –until recently under current President Obama’s administration. On Friday, October 14, 2016, President Obama continued his declared 2014 détente with Cuba by eliminating the $100 limit on the value of Cuban rum and cigars that authorized American travelers were permitted to bring back from their Cuban travels. Travelers are now permitted to bring back thousands of dollars in products, as many as 100 cigars, which can be valued upwards to $100 a piece in America, and several bottles of rum.

What does this mean for Americans, and for Cubans?

For Americans, the purchase of Cuban rum and cigars within the country, online, and from third-party nations has been illegal for the past half century. The recently lifted trade embargo will not only now allow Americans to enjoy these products for their personal consumption, but it may also create an incentive for profiteers to establish unauthorized black markets for distribution of the two highly coveted luxuries to those who are not authorized to travel to Cuba. This is similar to the American prohibition era of the 1920s, where the illegality of alcohol led to the underground production and distribution of the product. Although the current circumstances of the situation may vary slightly from then, the overall theme of profiteers looking to supply highly demanded, but illegal products to the masses stay consistent to the history of the 1920s.

For the centrally planned Cuban government and general population of Cubans, the lifted trade embargoes will mean great economic and political prosperity. This news story will most definitely be considered by leaders of Cuban rum and cigar productions in their next PEST analysis, to alter their business strategies and market towards American travelers, who, historically, have been legally restricted from these products. The increased rum and cigar sales will also mean millions of dollars of generated revenue for the government, and a step into the modernization of the Cuban economy that emphasizes international trade. For the vast Cuban population, this step towards international trade can also be interpreted as a step towards releasing Cuba from the Castro communist rule of the past fifty years, a scene that may seem to mirror the glasnost and perestroika policies of the communist Soviet Union that led to their collapse just twenty-five years prior.

With the upcoming US elections, this move to relieve American – Cuban tensions may be one of the last moves that the Obama administration makes, and it will take the next President who will soon take office in the White House to continue President Obama’s legacy.

Word Count: 450

Sources:

http://www.ctvnews.ca/business/u-s-removes-limits-on-bringing-in-cuban-rum-cigars-1.3115128

http://www.history.com/topics/cold-war/fall-of-soviet-union

http://passportto.iberostar.com/wp-content/uploads/2013/04/Caribe_puros_cuba.jpg

Apple Used Their Heads in Their New Headphones

Being at a loss for ideas to blog about, I turned to my colleague Drew Evan’s blog for inspiration. There, I read about the antagonizing of Apple in planning to release the AirPod and EarPod (with the lightning port plug) headphones for the iPhone 7 and consequently eliminating the use of the traditional 3.5 mm earphone jack. Having recently learned about business ethics in class, I, too, initially agreed with Drew that Apple was unethical in putting the millions of owners of headphones with 3.5 mm jacks scrambling to purchase new products.

However, as an open-minded business student and audiophile myself, I decided to investigate further into the new Apple headphones. To my surprise, I underwent a perspective change on this issue through reading Jennifer Allen’s article in Paste Magazine. In addition to learning from other sources that Apple will be releasing adapters for the new iPhone so that 3.5 mm jacks will be compatible, Jennifer’s article lists some benefits of the new headphones, including better audio quality in the EarPods (from the built-in Digital to Analog Converters (DAC) and the extra power produced by plugging into the lightning port), and the wireless AirPods eliminating the problem of tangled wires. With the improved audio quality, the market for audiophiles, including myself, will be more inclined to stay loyal to Apple and accompany our iPhones with these quality Apple products instead of investing our valuable time and money to research into the vast headphone market. At the same time, for the customers where audio quality is not a deciding factor for their purchase, the convenience of simply having headphones without wires may just convince them enough to go with Apple instead investing time in other Bluetooth headphones.

For these reasons, I can now appreciate Apple’s decision to take the courage to be the first in its industry to integrate the concepts of built-in DACs and lightning port plugs to focus differentiate their headphones to target separate customer segments. It will take time to see if Apple’s new business strategy of differentiating their products from the industry standard will actually prove revolutionary in the audiophile and headphone market, but in the end, as Ralph Waldo Emerson once said, “do not go where the path may lead, go instead where there is no path and leave a trail.”

Word Count: 386

Sources:

http://www.businessinsider.com/airpods-apple-iphone-7-wireless-headphones-explained-faq-2016-9

https://www.pastemagazine.com/articles/2016/03/pros-and-cons-of-the-iphone-7-not-having-a-headpho.html

http://cdn.mos.techradar.com/art/mobile_phones/iPhone/iPhone%207/Press/iPhone7-Press-07-970-80.jpg

Laboratory Acceptable but Business Unethical

The early 2000’s was an important time in promoting a “green,” environmentally friendly planet. It led large automobile corporations to rethink its marketing strategies, and in attempts to maximize its profits while satisfying environmental agencies and loyal performance enthusiasts, Volkswagen (VW) promoted its “Clean Diesel” engines.

From an article on Consumer Reports, it was reported that on September 18, 2015, precisely 359 days ago, Volkswagen received a notification of violation from the United States Environment Protection Agency (EPA). This led to a worldwide recall of as many as 11 million VW vehicles containing Volkswagen’s “Clean Diesel,” 2.0 L diesel engines that were emitting nitrous oxides 40 times the EPA acceptable amount; gases known to cause respiratory problems and that were overall against the idea of a “green” planet.

This begs the question: how could these VW engines have managed to pass laboratory tests? It turns out that during these tests, the emissions control system in these vehicles had been installed a dynamometer, a technology that tampers with the emissions system, subsequently making its emissions in the lab environmentally acceptable but immediately removed when sold to the public.

Business ethics are what keep the environment clean, the business world socially responsive and the general health of society safeguarded. VW is expected to reconcile with its stakeholders including the EPA, loyal customers, and those affected by the ensuing health problems through a $14.7 billion settlement. However, the initial lie and unethical practice of deceptive advertising has ultimately contributed to the ongoing global problem of pollution, the company’s loss of customer trust, and a tarnished reputation that VW will have to rebound from.

Word Count: 263

Sources:

http://www.consumerreports.org/cro/cars/guide-to-the-volkswagen-dieselgate-emissions-recall-

http://images.all-free-download.com/images/graphiclarge/volkswagen_logo_31115.jpg