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WISHING ON AN ONSTAR I am an auto guy working for DCX in Windsor, Ontario, and a very intense investor in the field of broadband and voice, including telematics [the combination of telecommunications and computing]. I thought Dale Buss’s article was just superb ["Wishing on an OnStar," October/November 2000]—like a fine meal. It was absolutely the best I have read so far on General Motors’ OnStar technology. He brought up some key trends: GM needs to keep its cars as dumb as possible. By minimizing computing power in the car, and letting information and smarts reside on the network, GM can avoid having its OnStar equipment become obsolescent. In addition, OnStar needs to go beyond the confines of the car and become a truly mobile personal assistant. I can’t believe that General Motors doesn’t see this. Imagine if OnStar were a portal to all sorts of services, accessible via voice. I could carry my OnStar from my car to work to my car again and even into my home. GM has a golden opportunity here. I hope it sees the potential I do with OnStar and, more importantly, can execute on it. —Edward J. Klinard
DUMB AND DUMBER IDEAS In his article, "Dumb and Dumber Ideas" [December 2000/January 2001], Evan Schwartz writes about four ideas that, in his words, are some of the "biggest turkeys" of recent years. His No. 4 idea is Microsoft. While I agree with his stance on the company’s misguided media efforts (anyone remember Sidewalk?), I take issue with his rationale. He mentions the WebTV acquisition and the $1 billion investment in cable-TV operator Comcast as examples of Microsoft’s failed attempt at transforming itself from a technology company to a media conglomerate. The reality, however, is quite different. In fact, Microsoft made these deals for very strategic reasons—as components of its expansive, post-desktop product strategy. Microsoft wants to own the component where the TV and PC meet and, over time, the entire television operating system. So, Microsoft didn’t want WebTV just for its capabilities as a basic Internet service, delivering Internet access and proprietary content to the home via a television interface. Instead, the company wanted WebTV because it knew it could use the technology as part of a digital set-top box operating system enabling everything from digital cable and interactive television to broadband Internet access, all on the same platform. Because Microsoft paid a total of $425 million for WebTV, which was valued at $148 million, the company essentially paid $277 million for a call option that gives it the opportunity to develop the broader strategy. Microsoft spent $7.9 billion to make strategic investments in cable-TV companies, including Comcast, for similar reasons. Microsoft wasn’t trying to evolve into a media mogul; instead, it wanted to ensure it has the leverage to push its operating system to the cable box and beyond. Microsoft’s strategic investments, in companies that control 54% of the U.S. cable market, offer just such an opportunity. Two fellow students, Prof. Richard Shockley, and I wrote a paper analyzing the Microsoft strategy using "real-options" theory [which applies classical options analysis to nonfinancial decisions, such as whether to build a plant] and Prof. Wayne Winston presented the paper at an executive-education class at Microsoft. He said the executives were surprised by the accuracy of our analysis. As it turns out, Microsoft used a variation of the real-options approach. So, who’s the dumb one? —W.R. May
EUROPEAN DISUNION Your article about the Internet in Europe ["European Disunion," October/November 2000] was very interesting, but it seems that you describe a too-bleak picture of France. Take, for example, the Minitel. Far from being a hindrance to the development of the Internet in France, it was a help because many Minitel businesses went to the Internet quickly. Sure, tax rates are high in France, but they are decreasing. The corporate tax rate will drop to 33% in a few years. In the development of the Internet, France has a big advantage: the youthfulness of its population. Another very important point for the development of the Internet is the euro. A common currency will help international e-shopping. Since 1998, economic growth in France has been higher than in the U.K. Isn’t that proof that France is succeeding in the new technologies? —Jéróme Pouzet
ENGINE TROUBLE As I read the magazine on a plane the other day, I had some disagreements with Bob Gilbert’s article [Man and Machine, December 2000/January 2001]. Car freaks like me will indeed be driving hydrogen- and electric-powered cars in a few years. And they won’t be without muscle. They’ll have an engine on each wheel hub pulling more than one "G" and accelerating from zero to 60 in five to six seconds. —David French
IT’S A MAD, MAD, MAD AD WORLD I greatly enjoyed the exchange between Jerry Della Femina and Sergio Zyman [The Last Word, December 2000/January 2001]. It is unusual and refreshing to hear such overt skepticism about Internet advertising voiced by those wonderful folks who brought us so much vacuous hand waving in the first place. Corporate marketer Zyman, like so many of his brethren in the Craft (connotations of witchcraft fully intended), still invokes the concept of brand with all the crypto-mystical implications that corporations insist on attaching to it. Zyman says: "The trick is to find ways of creating content that can actually communicate the benefits of a brand to consumers." And what "benefits" would those be? If there are any benefits at all in the wondrous qualities a brand purportedly embodies, the advantage is to the company that creates such a mystique, not to the consumer. So Zyman is right. It is indeed a trick, if companies can pull it off. Fortunately, the Web is letting consumers turn the tables on the tricksters. Zyman provides unintended humor when he notes that "sometimes consumers can get manipulated." No! I was rolling on the floor. Adman Della Femina says, "We’re going to have to be clever and figure out different ways to reach people. But we’re not going to reach them through advertising on the Internet." I think he’s right, though I would shift the emphasis slightly. It’s entirely possible to reach people through the Internet—just not through Internet advertising. Neurotic attachment to labels is preventing businesses from realizing the genuine potential of the Internet. The typical syllogism runs like this: Marketing must be annoying, so if we’re not annoying anyone, we must not be marketing, and therefore can’t possibly make a profit. Ergo, the sky is falling. At the end of the piece, Della Femina touches on an alternative to such stupidity, noting that companies are "trying to talk to people without the direct sell." Smart companies would do this, yes, though it seems that, on average, corporate IQs are still not breaking any records. I’d be a lot happier with another approach, however, and here I’m sure I speak for customers everywhere: Instead of leveraging "truth-based communication," companies should simply tell the damn truth. —Christopher Locke
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