🗂 Link: ‘Rijksoverheid al 4 jaar in de clinch met Oracle’

According to the confidential memo, Oracle’s routine tactic is to threaten based on incompliance and to maximize potential licensing issues. After that, software licenses and the looming costs of such licenses can be negotiated from such a beaten problem. The result can then be a relatively better than expected amount for the shocked customer, but is not a low amount.

Source: ‘Rijksoverheid al 4 jaar in de clinch met Oracle’

🗂 Link: What Cloud Vendors Really Want From Their Customers

How much a customer spends on an annual basis is absolutely an indicator of strength, both internally and to the market. It is also a clear indicator of being able to effectively execute to the often-publicized overarching objective of expanding the customer base’s portfolios of products over the course of the relationship and since inception. Cloud vendors and the analysts that cover them also know that as the annual spend rises, the baseline spend grows, which can be hit with an increase at renewal.

Source: What Cloud Vendors Really Want From Their Customers

Link: The Bezos-Buffett-Dimon health care venture: Eliminate the middlemen

“There’s ample room to replicate that success in health care, because the system in the U.S. has long been plagued by excessive transaction costs – the expenses incurred when buying or selling goods and services. These include irrational pricing, as evidenced by the price of services varying wildly for hospitals, insurers and patients. This, along with unnecessarily complicated billing systems, creates the need for extensive bureaucracies to manage all the varied relationships.”
Original source: The Bezos-Buffett-Dimon health care venture: Eliminate the middlemen

Link: Why are antiques now so cheap?

‘eBay and the internet have increased supply more than demand. It is much easier to sell an estate, or the contents of your attic, than before. But the upward potential for demand in the market isn’t nearly as significant. Some people say “well, I would in fact buy and collect antiques if I could get the right 18th century pieces at 40% their current values,” but many more people just aren’t interested at all.’

The Internet destroying yet another market by connecting people across geographies. Perhaps it was false value in the first place.
Original source: Why are antiques now so cheap?

Link: Why are antiques now so cheap?

‘eBay and the internet have increased supply more than demand. It is much easier to sell an estate, or the contents of your attic, than before. But the upward potential for demand in the market isn’t nearly as significant. Some people say “well, I would in fact buy and collect antiques if I could get the right 18th century pieces at 40% their current values,” but many more people just aren’t interested at all.’

The Internet destroying yet another market by connecting people across geographies. Perhaps it was false value in the first place.
Original source: Why are antiques now so cheap?

Link: Global race for 5G heats up with latest US Congress bill

“Prices vary widely across the United States but the average cost of installing equipment on a pole is around $2,000 per year. AT&T recently complained that it had received an estimate of $8,000 a year from a city in California. Even in low-cost Georgia, the local government felt it could get away with asking for $6,000 per pole per year…. There are roughly 350,000 base stations in the US and that number would likely have to quadruple (again, these are all rough figures) for 5G. So the annual cost of simply hosting 5G equipment is in the billions of dollars.”
Original source: Global race for 5G heats up with latest US Congress bill

Link: Global race for 5G heats up with latest US Congress bill

“Prices vary widely across the United States but the average cost of installing equipment on a pole is around $2,000 per year. AT&T recently complained that it had received an estimate of $8,000 a year from a city in California. Even in low-cost Georgia, the local government felt it could get away with asking for $6,000 per pole per year…. There are roughly 350,000 base stations in the US and that number would likely have to quadruple (again, these are all rough figures) for 5G. So the annual cost of simply hosting 5G equipment is in the billions of dollars.”
Original source: Global race for 5G heats up with latest US Congress bill

Link: Heptio readies its customers and community for Kubernetes critical mass

Includes some packaging/pricing:

“HKS is offered in four tiers including Starter, with one supported configuration, unlimited tickets and up to 25 nodes; Professional, intended for organizations that are growing their deployments, with up to three supported configurations, unlimited tickets and up to 250 nodes; Enterprise, for large, mission-critical environments that covers up to five supported configurations, unlimited tickets and up to 750 nodes; and a Custom version, intended for the largest web-scale environments of more than 750 nodes. Pricing starts at $24,000 per year for the Starter tier.”
Original source: Heptio readies its customers and community for Kubernetes critical mass

Costs that go into a $185 shirt, including snacks & other human affordances

At a fast-fashion retailer such as H&M, a simple cut-and-sew top can cost as little as $15. At Gap, something similar might run about $45. At Elizabeth Suzann, a small fashion label based in Nashville, Tennessee, one of the brand’s minimal kimono-sleeved t-shirts, made of cotton twill, is $140.

This seems like the kind of analysis that’ll be handy in the up-coming trade wars.

Link

When to go private cloud

As represented with the star in the map above, according to CPI data, at labor efficiency of 1,000 VMs per engineer and 66% utilization, these enterprises are poised to beat public cloud on price regardless of whether they use a commercial orchestration software package, an OpenStack distribution or the OpenStack source.

And, on IaaS pricing:

But price still does matter: In a 451 Research custom study commissioned by Microsoft earlier this year, the biggest reason to change primary provider was price, cited by 34% of respondents. Consumers don’t necessarily want the cheapest cloud service, but they don’t want to feel ripped off. If there is a cheaper option elsewhere, it appears end users will take it into consideration.

Announcements on price cuts gather attention, and are a great publicity and discussion tool for service providers. We think cloud prices will continue to come down through 2017, and may spread beyond virtual machines into object storage, and perhaps even databases – virtual machines came down 7% globally in 2015, but the cost of our small application only came down 2.4%. The fact that margins are still healthy suggests providers aren’t sacrificing huge amounts of gross margin to give such cuts. If they are, it might be a few nickels and dimes here and there, but it’s more likely that they are reducing costs through better procurement and management. If we are in a cloud price war, we’ve yet to see it really get off the ground.

And, see more commentary on the topic of IaaS pricing.

Source: Cloud gross margins: The price war has yet to really kick off

Public cloud by the minute

Google is able to automatically reward end users a discount for loyalty through a sustained-use pricing scheme – the company claims its method for high utilization means reservations do not hugely benefit them, and so it would rather reward users for loyalty rather than for paying up front and forecasting capacity. Google also offers a per-minute billing model (as opposed to per-hour offers from many providers), and this advantage can also be attributed in part to containers. However, as we show, the benefit of per-minute billing only becomes important when workloads are very bursty.

Source: Google economics: Containers are the key

“De-graniting and de-brassing” – Austin’s downtown tech scene

Austin entrepreneur Campbell McNeill said WeWork’s “high energy environment, cool furniture” and location at Sixth and Congress in the heart of downtown allows his startup, Cocolevio, “to attract the young talent we need for our cloud business.”

“It would be considerably more expensive to set up a similar situation on our own as a new tech startup,” said McNeill, Cocolevio’s co-founder and chief technology officer. “We appreciate we may be paying a lot per square foot, but it is completely worth it when you consider the intangible WeWork benefits like networking with other great startups, making great friends, periodic presentations by industry leaders and WeWork Labs.”

Some more highlights from the piece:

  • “three out of four tenants looking for downtown space are likely to be tech-related, Kennedy said. ‘Ten years ago, it would have been less than half that.'”
  • “Rents for the highest quality office space in downtown Austin average $49.07 a square foot per year, according to Cushman & Wakefield. That’s 40 percent higher than top-tier space in the suburbs, where rates average $35.10 a square foot.”
  • “tenants can expect to pay anywhere from $150 to $200 per month per space for unreserved parking. Reserved spots are as high as $300 per month.”
  • “The number of downtown tech workers — between 14,000 and 15,000, according to estimates from the Greater Austin Chamber of Commerce — is still tiny compared with the region’s overall technology workforce, which the chamber estimates at abou 130,000.”

Source: Austin’s tech scene heats up downtown

T-Mobile shifting entirely to unlimited data in new bid to shake up industry

Under the new plan, the Bellevue, Wash.-based wireless company will charge $70/month for the first line, $50/month for the second, and $20/month for additional lines up to eight, if the customer has auto-pay enabled. That averages to $40/month for a family of four, the company notes.

I’ll gave to check into that/

Source: T-Mobile shifting entirely to unlimited data in new bid to shake up industry

When Marketing Is Strategy

A good overview of what marketing does and should be doing. It especially applies to commodity markets and for products that have little “real” differentiation except in the mind of the buyer (cars, beverages, raw materials, etc.). Fashion (low and high) would be an interesting case.

When Marketing Is Strategy

Manufactured discounts

Outlets and off price chains first emerged for clearing out unsold merchandise from earlier in the season or products with defects. But now, the bulk of what is sold is no longer close outs. Instead, much is made to order for the off-price and outlet stores. For instance, some 90% of what Neiman Marcus’ Last Call outlets chain sells is made specifically for those stores.

This great deal was made just for you!

Manufactured discounts

Soon, the laptop bag will cost more than the laptop. This same thing happened with Microsoft Office, to some extent: a license for Office can (or used to?) run more than the actual computer itself; now I guess it’s mostly free-ish, with a chance for a marginally more expensive upgrade.

I still hear CIOs worry that cloud vendor lock-in would let them raise prices. This ruse is used to justify private cloud investments. Even without switching vendors, you will see repeated price reductions for the public cloud systems you are already using. This was the 42nd price cut for AWS, the argument is ridiculous.

Your address book is worth ~$45, your medical records ~£12,000

I’m envisioning one of those butcher charts with all the cuts of meat, except it’s a human and all their social info and personal data/records:

If Facebook values your phone book at $42, or £25.24 today, what do you think your lifelong medical record is worth? The health industry is a colossal business, much bigger than internet social networking, and pharmaceutical companies desperately need the data to reduce the risk on their own drug research planning. They have the means and willingness to pay for this data. [The UK government says £11,865.]

Your address book is worth ~$45, your medical records ~£12,000

The result is plain to see: Caring about the product means that it can be priced at a point which consumers care to pay.

Crazy cloud pricing confusion

451 found that there is a large differentiation among providers when it comes to pricing, which it says is because the market is still “finding its feet” so there are not standards for anything across providers, and especially with pricing. “Obviously this isn’t great for consumers, who have to understand each method and weigh every option when selecting a provider. Furthermore, comparing the total price of an application between providers and working out the value of a number of offerings is a difficult task.”

Crazy cloud pricing confusion

Finally, a monitor priced like the good old days: $3,499

Speaking of which, The UltraSharp 32 is now up for grabs worldwide for $3,499, while the $1,399 UltraSharp 24 is only available in South and North America to begin with and elsewhere on December 16th. No word yet on how much exactly the UltraSharp 28 will cost, but Dell did say we can expect it to be under $1,000 when it hits shelves in “early 2014.”

Seriously: remember when those massive CRTs cost thousands of dollars?

Finally, a monitor priced like the good old days: $3,499

This sounds like a good Chromebook

The $279 price seems about right, around as much as good smartphone, subsidized. Also, it comes bundle with some good bloat-ware:

Finally, the laptop includes a pair of USB 2.0 ports and charging via a tablet- and phone-like micro USB port (which can also output video via the SlimPort standard, much like the recent Nexus devices). The system also comes with 100GB of Google Drive storage for two years, a 60-day free trial of Google Play Music All Access, and 12 free GoGo Inflight Internet sessions. A 4G version will be available, but pricing and availability has not been announced.

I wonder if Google is paying them a subsidy.

This sounds like a good Chromebook

Opaque bundling and disrupting management consulting

This is a nice, recent HBR piece arguing that management consulting and lawyers are ripe for disruption.

While they don’t label it “bundling” (they call it “opacity”), that section is excellent and generalizable to how it works. Namely: once you bundle stuff, the buyer has a harder time getting a good deal because they can’t nit-pick the pricing of individual parts or pull them apart.

To be overly precise, I’d argue that opacity is a type of a bundling. Often, you can see the exact price if the products and services in the bundle, you just can’t do anything about it, like when you get your monthly cable/Internet/phone bill or a hospital stay bill (“if I one aspirin was $2 a pill I would have gone to Walgreens for it!”).
But bundling can also be “opaque,” as in carrier subsidies for smartphones or management consulting, it seems.

Opaque bundling and disrupting management consulting

How does the iPhone command such a high price?

The iPhone could thus be finally understood as a complex service business. It captures value through the phone bill but delivers value through a screen. A misdirection magic trick which many have tried to pull off. It’s essentially tapping into the $1.3 trillion communications market, skimming profits by delivering the “content” which lights up the wires.

The jag on bundling is good too. Also, cf. “whole product”.

How does the iPhone command such a high price?