|
[Web
version of this newsletter] [Newsletter
Archives] [Website Home Page]
[Please Donate Here]
Friday 2 May, 2008
Good morning
Time for a mini-Microsoft rant again, I'm
afraid (skip down to the color change if not of interest, or if I'm
'preaching to the converted').
With Frontpage crashing on me as regularly as once an hour
some days, I feel I'm owed some venting. But my frustration isn't
only about Microsoft's Frontpage program. It is also about
Microsoft's Outlook 2007, which has major performance problems that
Microsoft knew about (but decided not to worry about) before releasing
the program. It is about Outlook 2003 (I had to downgrade my
Outlook 2007 back down to 2003 in a desperate attempt to get something
that works the way it should again) and the way Microsoft's latest
updates broke its spam filtering. It is about Internet Explorer
program, which now semi-randomly stops showing some but not all images
on webpages. And then there is Microsoft's Vista OS, which is, to
put it politely, problematic in many areas and a backward rather than
forward step - something that is, alas, far from unique when Microsoft
'upgrades' its operating system. It is about the whole
architecture of Windows, whereby you can rarely truly uninstall
programs, which leave performance sapping clutter behind, and it is
about so many other things that we've become used to and have forgotten
to question/complain about.
No, the solution - for me and many others
- is not to switch
to a Mac. I have specialized software that only runs on a Windows
computer, and even if Macs were to provide a viable alternative, I have
probably ten thousand dollars or more invested in Windows based computer hardware
and software, and tens of thousands of hours of learning about how best
to work in a Windows environment. Would I get refunds for all this
money? Would I get years of my life returned to me? No, and
no. And if I have this much investment, imagine how much more is
invested in large corporations with tens of thousands of computers, and
hundreds of millions of dollars in investment, plus staff training, etc
etc.
For most of us, the concept of switching
from Windows to Mac computers makes as much sense as telling a Delta
Million-miler who lives in Atlanta to switch to AirTran. Perhaps
what we need, for computer users, is the same thing we need with
airlines - a computer users' bill of rights. Oh - wait - there is
such a thing already. The implied warranties for fitness of
purpose implicit in any sale transaction when you buy something give any
consumer/purchaser a set of rights, and impose obligations on the seller.
But, wait again. These warranties are
expressly excluded when buying software, as are all liabilities that might otherwise exist
for consequential damage caused by bad and buggy software. Does
that sound fair to you? You've more rights buying a dollar's worth
of goods at the local supermarket than you do when you spend $200 or
$2000 on new software for your computer.
Is it any wonder that software piracy is
rife and socially acceptable, when the products being pirated are so
substandard, and when paying money to own them - ooops,
sorry, you don't own anything, you merely get a revocable license to use
the software, subject to a bunch of terms and conditions and exclusions
and limitations, conveys no added benefits of any kind. Really,
given full free choice, who in their right mind would pay several
hundred dollars to buy a piece of software that promises nothing except
heartache and heartbreak? A person who buys a pirated copy of a
software product is sending a message to the manufacturer about what
that software is truly worth.
And, for added insult, if you call to
report a bug and ask for help solving the bug, you'll find that's not
possible unless you're prepared to pay for it. Yes, you pay good money for a support call,
which may or may not resolve your problem. First we pay for the
software, then we pay more to buy a manual, then - when we have problems with it
- we pay more for support, then when a new version comes along that
promises to fix all the problems in the earlier release, we gullibly
rush to buy it. Microsoft has a financial incentive to sell us bad
buggy software.
Talking about money, at least the airlines
can hide behind their chronic lack of profit as partial excuse for the
bad service they give us. And, sure, Microsoft's profit was down
too for its latest quarter, ended 31 March. It made only $4.4
billion, on revenues of $14.5 billion - an amazing 30.3% net profit
margin. There's no way that Microsoft can claim that it can't
afford to spend more money on better quality control, testing, and
support of its products. What other massive (and near
monopolistic) public company makes a 30.3% net profit margin, and gets
away with zeroing out its liabilities while delivering massively flawed
products?
Even the oil companies, currently being
criticized for their extraordinary level of profits at present, don't
get anywhere close to Microsoft's profit margins. Earlier this
week Exxon, BP and Shell posted quarterly profits, all up, but Exxon's
profit margin was 9.3%, BP's was 8.5% and Shell's was 8.0%.
Microsoft makes 3.5 times the net profit percent that these oil
companies do - why is no-one accusing Microsoft of rapacious pricing
while everyone is so quick to levy such accusations at the oil
companies?
Comparing Microsoft again to the airlines,
if the airlines had the same quality control approach that Microsoft
does, we'd have dozens of planes crashing and burning every day.
The airlines have the FAA to ensure their adherence to quality control,
but Microsoft has nothing and no-one overseeing its products. We
need an FAA equivalent to police Microsoft.
Okay, so maybe it might 'slow down the pace
of software innovation' if Microsoft was required to make its products
less buggy and better supported - but who here is desperately waiting for
Microsoft's next new innovation? We've all become unpaid Beta
testers for each new Microsoft product, and for that reason, many of us
still haven't yet upgraded
to Vista, and those of us who have often wish we hadn't. It is the
same with their application programs - many of us haven't touched Office
2007 (and I have downgraded my 2007 back to 2003). Many
users are still very happy using Office 2003, Office 2002, Office 2000
or even earlier versions.
Software 'innovation' these days is more
usually cosmetic changes that interfere with what we've learned and
become familiar with, while adding no really useful extra features.
Software innovation these days is as useful as the fins that sprouted
and changed each year on the 1950s designed cars.
So, let's see Microsoft slow down its pace
of so-called software innovation, and spend some of its tens of billions
of profits in making the products it sells more reliable, and the
support it offers more available and less expensive.
Phew. Now that I've got that out of my
system, what next? Well, there's nothing like an upcoming absence
from the office to concentrate the mind, and I've been very busy this
last week doing some 'housekeeping' on the website, updating articles,
and preparing articles to offer while I'm out of town the next few
weeks. I'm excited about several of the things I'll be writing
about, including, at long last, a positive update on my ongoing struggle
against spam, and it has been a difficult decision as to which article
to get completed and to you first.
Last week I wrote about a Bluetooth headset
- the Cardo S-800, and it was the first time I felt able to give a
Bluetooth headset a fairly unqualified recommendation. I had
several readers write in and ask how it compared to the well known and
highly regarded Jawbone headset. My answer necessarily had to be
'I've no idea, because I've never tested a Jawbone' but after a series
of repeated requests, my answer changed to 'wait until Friday'.
An overnight order/delivery from Amazon saw
a Jawbone in my hands on Tuesday, and after extensive trialing, I'm
going to gift you with two articles rather than one this week. And
so :
This
Week's Feature Column : The Aliph Jawbone Bluetooth Headset
: Correctly hailed as a best-of-breed product when it came out in
2006, the Jawbone has garnered a loyal following of devotees and
continues to be popular. But how good is it when measured against
state-of-the-art 2008 technology, something that is appreciably better
than it was in 2006?
After reading the Jawbone review, you can
click over to the Jawbone
vs Cardo comparison page that highlights the differences between the
two units and helps you choose the better unit for your needs.
Dinosaur watching : Another
airline goes bust. Eos - the all first class airline flying
between London's Stansted airport and New York/JFK closed down last
Sunday. Bizarrely, it had announced just a week earlier that it
had secured a new round of funding that would be sufficient to see it
through to regular profitability next year, then it had to eat its words
- the funding fell through and the airline collapsed.
Why did Eos collapse? Well, for
once, the failed executives didn't trot out the tired 'high fuel cost'
excuse. They were actually very silent, particularly about the
mysterious last minute disappearance of the new funding. But
you'll not be surprised to learn that I have some thoughts on the
subject. Indeed, I've a great many thoughts, too many to include
in the newsletter. So as a bonus for this week :
Bonus Feature
Column : Is Airline Competition Always Fair? :
Should established carriers be allowed to sell tickets below cost, and
below startup carriers' fares, so as to starve the startup carrier into
bankruptcy?
As a positive side note to the sad failure
of Eos, the remaining independent all-business class airline operating
between London (Luton) and New York (Newark), Silverjet, happily
announced it had secured $25 million in new capital from an unnamed
investor in the UAE, with the possibility of up to another $75 million
if needed in the future to fund the airline's expansion into new
markets, particularly in the Middle East, Far East and Africa.
So hopefully we'll still see Silverjet on
the route for the next some time.
The counterpoint to airlines failing is
airlines merging. People got very excited for a few days at a
possible link up between United and Continental, but then that
receded away, and currently most of the gossip is about a three way
'closer working relationship' between AA, CO and BA.
AA and BA are long-time suitors, and a
'closer working relationship' would be a proven way around the
regulatory minefield of merging a domestic and a foreign carrier.
The addition of Continental is a surprise, and rumor has it CO would
necessarily join the Oneworld airline alliance.
Meanwhile, after being spurned first by
Delta and now by AA, United is reputedly once more looking at US
Airways, and airline it has of course spectacularly failed to merge with
in the past, way back before both airlines had bankruptcies, and before
US merged with America West. But apparently the magic of old
romances linger.
It is time to look a bit more closely at
the claims underlying the DL/NW merger. One of the claims that
Delta and Northwest are making to support their request to have their
merger approved is that their route networks are different.
The assumption is that if the two airlines both competed on a route,
then reducing the two airlines to one airline would reduce the
competition. But if one airline flies between a certain two
cities, and the other airline flies between a different two cities,
merging the carriers wouldn't affect the present level of competition on
either route.
The logic of this is good, but only up to a
point. Both airlines are predominantly hub and spoke type
carriers, and to get from somewhere to somewhere else, you usually end
up making two flights - one into a hub from where you live, and then a
second out of the hub and to where you want to go.
So, here's the trick, and here's where
the lie is revealed. To travel from, for example, Seattle to
Philadelphia, if I was traveling with Northwest I'd probably fly first
to either Minneapolis or Detroit, and then from there on to
Philadelphia. And if I was traveling with Delta, I'd probably fly
first to either Salt Lake City or Atlanta, and then on to Philadelphia.
Using the narrow definition of different non-overlapping routes, I'm
flying totally different routes between Seattle and Philadelphia and the
two airlines aren't competing.
But, the reality is that suggesting NW
and DL don't compete on this (or most other routes) is nonsense, as
we all know. Both NW and DL offer fares to travel between SEA and
PHL. It makes little difference to me which hub I fly through (and
little difference to NW and DL's fares, either), and for me as a
passenger, a NW/DL merger means I've had the number of airlines offering
fares between Seattle and Philadelphia reduce.
The key issue, for deciding if the airlines
are sharing routes or not, is not to look at single flight itineraries
that pretend a passenger is flying only from or to a hub, but to look at
total itineraries that transit through hubs on the way from and to other
places.
If you do that - and I urge the Justice
Department and DoT to do this - then it can clearly be seen that,
within the US, the two airlines have an enormous degree of overlap.
Which is, ahem, quite the opposite of how they're trying to spin the
situation to us and the regulatory bodies at present.
Let's look at another bit of nonsense
being offered in support of this merger.
Delta CEO Richard Anderson said, in support
of the merger, 'You can't underestimate the spike in fuel prices and
how it is fundamentally changing the industry'. The previous
week he said the airlines needed to increase fares by 15% - 20% to
reflect the increases in fuel costs.
Does the need for a 15% - 20% increase in
fares sound like a fundamental change to the industry? It sure
doesn't to me - it sounds to me like a mild correction in costs after
years where air fares have lagged behind the general cost of living
inflationary increases. So we might end up with airfares costing,
in relative terms, what they did at some time back in the 1990s, or the
1980s.
That's not a fundamental change at all.
It's just more of the same.
Indeed, we're pretty much all the way to
that 15% - 20% increase already. Not only do we seem to be seeing
airlines going broke on a weekly basis at present, but let's not forget
the other thing that is happening every week - airlines raising their
fares.
Last week saw United initiate a fare
increase of between $4 - $70 per roundtrip fare. This week Delta
started a new fare increase, with either $10 or $40 added to its fares.
Courtesy of Farecompare, here's a table of fare increases so far this
year :
1. January 3rd, initiated by United, $10
roundtrip added to base airfare
2. January 24th, initiated by
Continental, $20 roundtrip added to fuel surcharge
3.
February 22nd, initiated by United, $10 roundtrip added to base
airfare
4. February 28th, initiated by Delta, $10 roundtrip
added to base airfare
5. March 7th, initiated by United, $10
roundtrip added to fuel surcharge
6. March 14th, initiated by
United, $4-$50 roundtrip added to base airfare
7. April 9th,
initiated by United, $4-$30 roundtrip added to base airfare
8. April 15th, initiated by United, $10-$20 roundtrip added to fuel
surcharge
9. April 24th, initiated by United, $4-$70
roundtrip added to base airfare
10. April 28th, initiated by
Delta, $10 and $40 roundtrip added to fuel surcharge
That looks like a lot more than 15% - 20%
already.
Not only are the airlines increasing
airfares every time we blink, but they're seeking other ways to increase
their profitability at our expense, too. Here's an
interesting article about the latest disservice being perpetrated on
us by the airlines. They have figured out that if they fly
slower, they'll burn less fuel and save money. As the article
tells, Northwest proudly points to saving $535 in gas costs by
lengthening a flight from Paris to Minneapolis by 8 minutes.
Sounds like a great idea, right? No -
it is a terrible idea. Let's do something that Northwest has
apparently failed to do, and carefully think through all the
ramifications of this longer flight time.
It is far from clear how much money NW
actually saved on this flight (why is it that I, who has never worked
for an airline, have to explain fundamental elements of their business
to them?). Let's start off by accepting their claim that they did
indeed save $535 in fuel costs, and that the flight was lengthened by 8
minutes.
But there are counterbalancing costs
incurred by the longer flight time to be considered. First of
all, the crew on the plane will have to be paid for 8 extra minutes of
flight time. Let's just guess that the crew on what was probably
an A330 costs about $1200/hr in total. So there is $160 in
extra crew costs.
Now, secondly, the airplane has just moved 8
minutes closer to needing its periodic maintenance - most of the
maintenance schedules are triggered by flight hours. I'm going to
guess that an average cost of maintenance works out to perhaps $1200 per
flight hour. That is an extra $160 in maintenance costs.
Now, thirdly, the passengers aren't just
sitting still doing nothing for those 8 minutes. Some of them will
be using the restrooms, asking for drinks, breaking the seats, and
generally accelerating the wear and tear of the passenger compartment.
You can guess any number you like to allow for the extra usages and
extra wear and tear - let's say this is a moderate $50 extra for
passenger wear, tear, and consumption.
Fourthly, there's an obscure cost that may
or may not come into play. By tightening their schedules a few
years ago, some of the airlines were able to get more flights per day
out of their planes, saving themselves the need to buy (or keep) more
planes, and getting better, more efficient, use out of the planes they
had. Some allowance has to be made for the ownership costs per
hour of the plane - I've again no idea what that figure may be, but if
we think of a $75 million plane that has maybe a ten year depreciation
schedule, and which works maybe 15 hours a day, 350 days a year, then
that suggests the depreciation cost alone, per hour, is about $1500.
So we've just added another $200 in depreciation, too.
So, let's add this up, shall we, and see
exactly how much money NW saved with its eight minutes. Golly -
look at this : $160 (crew) + $160 (maintenance) + $50 (passenger
wear and tear) + $200 (depreciation) = $610. Bravo, Northwest.
Your 'saving' of $535 is actually a net loss of $35. Even
if my numbers are drastically wrong, the fuel saving is massively
reduced, possibly all the way down zero, when you consider the
offsetting increases in costs.
With logic and mythical 'savings' like this,
is it any wonder that Northwest lost $191 million in the first quarter
of this year?
And there's one more cost that no-one
seems to care about, not even the the so-called 'consumer advocate'
in the article who said 'If it means that airlines can keep their costs
down, keep their ticket prices down, and save a little fuel, that's
fine'.
That is the cost of the wasted time of the
passengers on the plane, forced to each spend another 8 minutes of their
lives in miserable uncomfortable unfriendly conditions. Let's say
there were 250 passengers on the flight. That's a callous
disregard for 33 hours of passenger time.
The airlines are nickel and diming us out
of our lives. The extend the time we have to get early to the
airport and early to the gate, they extend the time we have to wait for
our bags, and now they extend the time their flights take, too.
Meanwhile, alternatives to airline travel
continue to look more and more appealing, and with slower flights,
it increases still further the distance that is quicker to drive (to say
nothing of being more comfortable and more convenient).
While eight minutes, by itself, doesn't seem
like much, it is like the death of a thousand tiny cuts - it all adds up
for us as passengers in terms of the total inconvenience factor.
And, also, for the airline, each 8 minute addition means somewhere, some
passenger will decide not to fly, and while it might seem impossible to
equate a seemingly trivial 8 minutes of extra travel time on an 8 hour
flight with someone deciding not to fly between Paris and Minneapolis at
all, sooner or later, there will be effects of this nature. Has NW
also thought about its precious $535 'savings' in the context of how
losing just one single passenger off that flight might cost it more in
ticket income than the entire $535 'saved'.
And it could be possible to lose a passenger
on that flight, even with a small 8 minute time increase. Here's
how : Maybe someone wanted to fly from - well, for example, from
Seattle to Paris, and they were presented with a range of different
flight choices, on different airlines and with different total journey
times (depending on route flown, connecting time in hubs, and, of
course, aircraft flying speed). Many computer fare/schedule
displays give priority to the shortest flights first, and, other things
being equal, passengers of course prefer a shorter journey to a longer
one. Maybe this 8 minutes might be enough to move the NW itinerary
down one or two places in the display of flights, and then they could
stand to lose a lot more than just one passenger.
Bottom line? This is a stupid move on
NW's part (and on the part of other carriers, too). It trades our
time and convenience for their profit, and with the 'savings' created by
flying slower being somewhere between totally trivial and actually
losses rather than savings, it shows the airlines place almost no value
at all on providing a convenient service to their customers.
Sooner or later, that's going to come back and haunt them. Oh,
wait - did I say 'sooner or later'? It is neither sooner nor later
- it is now. Look at the across the board losses suffered by the
dinosaurs, the shrinkage of passengers traveling with them, and the
frenzied never ending rounds of airfare increases, none of which seem
sufficient to return the airlines to profit.
The airlines like to say that fuel and labor
are the two biggest costs they incur, with the direct implication being
that fuel and labor are the most important two parts of their
business. Wrong! Very wrong! The biggest number on
their profit and loss is not fuel, and neither is it labor. While
the airlines have been obsessing over these two aspects of their
operation, they've taken their eyes off the ball and are overlooking the
biggest variable of all.
Passenger income - and how to positively
grow it, other than through fare increases and diminished service
standards - that should be their core focus and objective.
Talking about flying more slowly, I'd
commented a couple of weeks back about the resurgence of turbo-prop
regional planes, replacing the previous love affair airlines had enjoyed
with regional jets, due to them being greatly more fuel efficient.
Turbo-prop planes fly slower than regional jets (300 - 400 mph instead
of 500 - 550 mph)
The latest indicator of this is an
announcement by Alaska Air regional subsidiary Horizon Air, which plans
to scrap its 20 Bombardier CRJ 700 jets and replace them with Q400
turboprop planes. But in this case, the savings to Horizon are
almost certainly real, not imaginary as with the Northwest scenario.
As are the increased time costs for their passengers.
This will be my last week of commenting
on the Southwest Airlines share price. On Wednesday it briefly
touched $13.50 - probably the point where I'd decide to cash in the
shares that were initially identified as a good value on 13 March at
$11.70. A 15.4% return in just over six weeks is great and
sufficient as to enable one to cash out and feel very pleased with the
six week experience.
Interestingly, the main reason for the leap
in Southwest's price this week (it closed at $12.70 last Thursday) has
been due to an external factor that is actually bad for Southwest.
A reduction in the underlying cost of oil has made all airline stocks go
up significantly, but as per my original
analysis here, the whole driver of seeing Southwest as a short term
opportunity was its fuel hedging. The more that fuel prices go up,
the greater its competitive advantage becomes compared to other
airlines; the more fuel prices drop, the less this advantage becomes.
But plainly many investors haven't
thought this issue through, which is another reason for thinking it
best to cash in one's holding at a time when there's a positive gain to
be realized.
A couple of readers wrote in to caution me
about issuing stock tips, for fear of exposing myself to all sorts of
liability. I enjoyed the challenge of making a public
recommendation and then tracking if I was right or wrong, but can do
without the liability, so will probably stay silent in the future.
Oh - a post script to the above comments.
If I'd cashed out at $13.50 on Wednesday, maybe I'd have made a mistake.
Southwest's price continued to firm on Thursday, touching $13.59 at one
point, and closing at $13.52.
This week's 'China is an amazing place'
statistics : China expects its airfreight traffic to grow
six-fold in the next twenty years, with a requirement for 2,800 new
airplanes to be purchased in the next 18 years.
And it opened what it calls the world's
'longest sea bridge' on Thursday - a 22 mile long bridge from
Jianxing to Ningbo (close to Shanghai). It is the world's longest
sea bridge because the world's longest (any) bridge is actually on a
lake - Lake Pontchartrain - and is 24 miles long.
Perhaps go see the bridge (as well as the
new world's largest building - Beijing Airport) when you join our
China tour and cruise this June.
Throwing away an old cell phone? With
the rising cost of minerals and metals, there could be some money hidden
inside - indeed, as
this article explains, an old cell phone yields a 30 times higher
percentage of gold than the average gold mine.
This Week's Security Horror Story :
The passenger's name was on the airline's possible terrorist list, and
so the airline staff refused to let the passenger fly, no matter how
much he tried to persuade them he was not a terrorist.
This is a story that is played out
continually, indeed one major airline admits to having 9,000 passengers
with 'false positive' problems every day.
But this particular story has a twist to it.
The passenger that the airline refused to allow to board and fly the
flight was a Federal Air Marshal, and he had been assigned to fly that
flight to protect it against terrorists.
It is impossible to understand the thought
processes when an airline calls a credentialed Federal Air Marshal a
possible terrorist, and refuses to allow him to fly a working flight
that he was assigned to protect. Details
here.
If you take a gun to the airport and
through security without permission, you're up for a world of hurt,
and possibly federal charges, as well as a TSA administrative fine.
Except, of course, if you are, yourself, a TSA screener, even though you
have no authorization for taking the weapon to work with you.
Details
here.
Here's a
depressing article - pilots are failing the mandatory psychological
screening they must face before being allowed to carry a firearm in the
cockpit (while still being allowed to fly the plane, a much more danger
weapon than any pistol will ever be).
One of the questions that many pilots get
wrong is 'Would you like to be a fighter pilot?'. If pilots answer
yes (and, doh!, many airline pilots are ex military, and many more would
have loved to have enjoyed the ultimate thrill that is flying a fighter
jet) the TSA concludes this shows overly aggressive personalities and
disqualifies the pilots from carrying a firearm.
I included an email from a reader last week
who wrote about never having toothpaste detected in his carry on bag.
This caused a flood of other readers to write in and say 'me too' and to
list other liquids that they've also repeatedly carried in their carry
on bags without declaring, and never getting caught.
It also brought an interesting response from
someone-who-shall-be-nameless in the industry, who writes
Most x-ray systems can NOT pick up
toothpaste. Why?…. Because the newer packaging is made of light weight
and flexible plastic. The new machines can’t see it.\
In days of old,
most toothpaste tubes were made with plastic coatings and aluminum. In
fact some are still made this way. Colgate is a mixed bag, depending on
the product; Crest is best because the smaller tubes are the new
packaging. In short, your reader is lucky based on product design
changes and most likely the product he selects.
To be honest I hate the
Crest products, but I carry it on all my business trips. Ahem, with the
same result as your readers. Also the ingredients in the tothpaste make a
difference as well. Some products are more dense and will always get
nailed.
There are other tricks as well with other liquid and gel products…
Which makes one think there's a different
reason why the TSA not only limits the liquids you carry, but demands
you take them out of your carry-on and show them separately. Could
it be they require you to take them out because, if you don't, they
can't see them on the X-ray machine?
And one common misunderstanding - several
readers also reported that their nail files were never being detected
either. Ummm - nail files are no longer forbidden. Here's
the
current list of what you can and can't take in carry on.
I hope to get a newsletter to you next week
at more or less the normal time, but will be in Barcelona, immediately
prior to going on the South of France river cruise. Meantime, with
the three articles and this long newsletter, you've way over 10,000
words of new material this week, should you choose to read it all!
Until next week,
please enjoy safe travels |