"Three years ago these guys were wandering around with their hands out." -- Gartner G2's Mike McGuire to The New York Times on the record industry's pressing Apple to revise iTunes pricing
The hottest price promotion at Costco (COST) stores these days is cheap gas. Costco is boosting store traffic by getting shoppers to line up for gas that's priced anywhere from several cents to 30 cents a gallon less than competitors'. At the Costco in Woodinville, Wash., on Aug. 30, regular gas was $2.59 a gallon, vs. as much as $2.77 at nearby stations, according to Gasbuddy.com, a price-comparison Web site. Costco says it sold about $3 billion of gas in the fiscal year ended Aug. 28, up 30% from the year before.
The goal at the 227 U.S. Costcos offering gas is to beat prices at the five nearest gas stations, says CFO Richard Galanti. Costco keeps costs low by having customers pay at the pump (you need a membership card, which costs $45 a year). That eliminates cashiers. High volumes help, too: Stores often replenish their gas supply daily. Meanwhile, store traffic is climbing. "If you've already got them in the parking lot, chances are they'll run in to grab a rotisserie chicken for dinner," Galanti says. Costco says that every $1 spent at the pump generates up to 40 cents in additional sales inside the store.
Rising energy costs could tame the expansive habits of Exurban Man. You know him -- that prototypical consumer who bought into all the supersizing trends of the past decade: big SUV, big house, big commute. But as oil prices surge past $70 per barrel, is he headed for extinction? A back-of-the-envelope calculation shows a typical member of the species could face an extra $4,000 in yearly living costs.
Enticed by the rugged image of the SUV, Exurban Man switched, let's say, from a fuel-efficient Honda Accord (HMC) sedan to a stylish Nissan Pathfinder (NSANY) gas-guzzler. Shortly thereafter, he jumped on the housing boom and moved from the Chicago suburb of Oak Brook to up-and-coming exurb Yorkville, 55 miles away from his job in the Windy City. Much of the appeal of an exurb, of course, lies in its open space and larger lots. Exurban Man took advantage of the chance to spread out, trading in Pulte Homes' (PHM) best-selling starter-size home in Illinois, the Pinebrook, for its popular 3,400-plus-square-foot model, the Scarborough.
Master of his castle, yes, but the new butler's pantry and two-story family room mean 1,650 more square feet to heat in the winter. With July natural gas priced at $9.71 per thou-sand cubic feet in the region, his heating costs will rise by $283 according to a conserva-tive estimate by the Energy Information Administration.
Maybe the Pathfinder will navigate snow drifts better. But at 17 miles per gallon, vs. 28 for the Accord -- and assuming $3-a-gallon gas and the longer commute -- the SUV will eat $3,796 more in fuel per year. Not enough to send Exurban Man to the tar pits perhaps, but an incentive to adapt.
It's the rare office worker who, locked in videoconferencing hell, doesn't fantasize about sci-fi fixes for disconnected voices, jumpy faces, and connection failures. But when CEO Jeffrey Katzenberg of DreamWorks Animation SKG (DWA) got frustrated with the video link-ups to discuss his $100 million cartoons, he actually did something about it. DreamWorks teamed up with Hewlett-Packard (HPQ) to create a state-of-the-art system, the Virtual Studio Collaborator (VSC), that spared no expense to make workers hundreds of miles apart feel as if they were in the same room.
Encouraged by the results, HP has quietly been selling a scaled-down version of the system. While HP is mum about its specific plans, sources expect an announcement later in the year. Dubbed Halo, a single system costs slightly less than $1 million, sources close to the deal say, almost 10 times as much as a high-end custom conferencing system. But HP hopes to shake up the $5 billion videoconferencing industry with the smaller version of DreamWorks' VSC, the multiroom conferencing and data-sharing system that links that company's animation campuses in Los Angeles and Redwood City.
DreamWorks' VSC is to standard videoconferencing what Shrek is to the Katzenjammer Kids. Built in 2003 at a cost of "several million dollars," according to DreamWorks' Chief Technology Officer Ed Leonard, its twin conference rooms feature 14-ft.-by-20-ft. rear-projected, high-definition screens, high-powered lighting, sound isolation materials, and recording-studio-quality microphones and speakers. A standard high-end system swaps voices and images at 768 kilobits per second; the VSC rooms maintain a 30-megabit-per-second connection. The effect is disarming: Dreamworks execs in different locations interact naturally with uninterrupted discussion, while zooming in on drawings to see facial expressions and scenery.
HP licensed the technology and already has 20 Halo sites up and running, says Leonard, including one at Advanced Micro Devices (AMD). Halo will stretch IT budgets. But Leonard figures it pays for itself through reduced travel costs for private jets, hotels, and so on: "Companies can justify the expense of these rooms in three flights."
Chinese companies circle U.S. targets, while Americans eye deals on the mainland. So how well do U.S. boards understand the region? A study of America's 100 largest companies by partners of recruiting firm SpencerStuart shows a minuscule 1.8% of their directors are of Asian heritage. Only 2.3% have worked in Asia, run an Asian business, or worked directly for an Asian company. Exxon Mobil (XOM), Pfizer (PFE), and Merrill Lynch (MER) are among those that fit the bill. "The rest risk making decisions in a vacuum," says Dennis Carey, the study's lead author.
Insurance broker Lorne Adrain has made the neighborhood barbecue a national affair. Four years ago, when he fired up his grill for a block party in his East Side Providence neighborhood, it led to shared garden tools, a baby-sitter phone tree, even a key exchange. "We built trust," recalls Adrain, 51. Since then he has had surprising success spreading the simple idea of using barbecues to promote community involvement. He conspired with Harvard Business School classmates to create National Neighborhood Day on the second Sunday in September (Sept. 11 in 2005). His Web site (neighborhoodday.org) has downloadable invitations and party postings. This year Adrain expects nearly 10,000 related barbecues.
He recruited outfits such as Dell (DELL) and Microsoft to promote the event through volunteer programs; CEO Tom Ryan of CVS (CVS) is among his advisers. Employers see a low-cost way to support communities and workers. The food's not bad, either.
Google's (GOOG) rep for technology innovation is well known. But the Internet kingpin is also showing an inventive streak in human resources as it competes for an increasingly tight supply of search-programming talent. Google any of the following names: Udi Manber, head of Amazon.com's (AMZN) A9 search subsidiary; Prabhakar Raghavan, Yahoo!'s (YHOO) research head; or Susan Dumais, one of Microsoft's (MSFT) top search researchers. The results page is adorned with a "Work at Google" ad. Such Google employment ads also surface on searches for names of many top academics in search, including W. Bruce Croft, who chairs computer science at the University of Massachusetts at Amherst.
A bold move to snatch away top talent from competitors and academia? In a way, yes. But such Google ads also turn up alongside queries for big-name Google engineers, such as Adam Bosworth and Rob Pike. That indicates Google is less interested in going after these particular individuals than in attracting folks who have an interest in the oft-cited computing gurus. "It's designed to go after the people looking to find us," says Croft, who says such ads have appeared next to his name for "several months." It's a novel recruiting tactic. Amazon.com serves up a similar ad alongside a couple of these names, but Microsoft and Yahoo are nowhere to be found.
Bulk buying is coming to airlines, courtesy of Air Canada. (ACHAQ) Travelers who fly between the U.S. and Canada can protect themselves from fare fluctuations -- and perhaps save money -- with the airline's new cross-border Flight Pass. If you fly a lot between New York and Toronto, for example, it can save you up to 30% compared with Air Canada's normal midprice fares. For $3,311, you can lock in 10 flights -- five round-trips -- good for 353 days. A trip that might run $780, before taxes and fees, costs just $662 under the program. But read the fine print. By booking well in advance or accepting less-desirable times, you might be better off without the pass.
Air Canada, thriving since it emerged from a restructuring last fall, has offered a domestic version of Flight Pass since spring 2004. United Airlines, (UALAQ) an Air Canada marketing partner, is studying the program for the U.S.