Thursday, February 11, 2010

The Toyota Weigh


For years Toyota has been the darling of capitalism. The "Lean Manufacturing" philosophy and "Toyota Way" became the model to emulate for manufacturing corporations around the globe. As people are quick to stand behind a winner, they tend to be even quicker to dissociate themselves if and when they fall from grace a la Tiger Woods.

To be fair to Toyota, the latest estimate is that their vehicles were responsible for 19 deaths in the past decade.[1] While that's 19 deaths too many, it pales in comparison to over 420,000 motor vehicle related deaths that occurred in the United States alone over the same decade.[2] It will take months to determine if Toyota executives acted with negligence or were slow to respond to the reports of problems; but given the statistics, even if Toyota admits 'mea maxima culpa', driving a Toyota remains safer than driving any given vehicle while texting, programing a GPS, speeding, or under the influence of alcohol among other driving hazards. It just happens that a large, financially successful corporation can be held accountable for those nineteen, while most of the 419,981 others lack such a powerful scapegoat.

That's not to acquit Toyota--especially if they knew about the design flaws and opted not to correct them for economic reasons. Ford allegedly did this with the Pinto in the early seventies. According to sources, the company knew about a design flaw that could cause a gas tank explosion in the event of a rear-end collision but determined that the ensuing lawsuits could be settled for less than the cost of fixing the design (since it was already well into production)[3].

While the Pinto put a large gash in Ford's reputation, it has obviously recovered and is now all but forgotten. Given the scope of Toyota's recent recalls, this could have a much bigger impact on the company's reputation and future sales than the Pinto miscalculation did on Ford.

Some analysts have gone so far as to predict bankruptcy for the auto giant. This possibility may actually not be too far fetched given the debunking of the "too big to fail" myth in the past couple years. This, in addition to the fact that Toyota is still expecting a loss for the 2010 fiscal year (ending March 31) even before the impact of the recent recalls[4]. Even so, it's also in the best interest of many economies, including the United States and Canada, to continue to support Toyota since the company produces so many local jobs.

At the end of the day, I wouldn’t feel too concerned about the statistics of driving a Toyota; but I do think it’s time for business to recall the cliche of the Toyota Way. Many of the principles will remain of course, but their association with Toyota will irreversibly fade. Now there may be a new business model for business to emulate: The Google Way.

Tuesday, February 2, 2010

The Future of Reading

Imagine reading the morning paper without getting out of bed. Imagine going to school without needing a single textbook. Imagine going into a meeting where all you need is a clipboard sized device that has access to all the documents you need at the touch of a button. The electronic digital paper revolution is here. I know it's been said before, but now it really is only a matter of time before 8.5 x 11" paper really begins to go the way of the dinosaur. According to the EPA, the average US worker uses 10,000 sheets of paper each year*. That number won't fall to zero any time soon, but players in the pulp and paper and the printing industries need to start looking forward and adapting to avoid becoming extinct, because the future of paper is here.


/The future/

2010 has brought on an array of new devices to the market. The Amazon Kindle has an early lead with 60% of the market share, but with a market that is poised to grow exponentially in the coming years, there are no clear winners yet. All of the 'contenders' below, except for the LCD-based iPad, use E Ink Corporation's patented Electronic Ink technology, which actually uses a fairly straightforward concepts in chemistry and physics to produce a static image that doesn't require continuous power or back-lighting. Ultra-thin devices that can be rolled up and perhaps even folded could become commercial in a matter of years. The file size of an ebook can vary, but considering the cost and size of memory (an 8GB micro SD card can be purchased for $20 or less), it's not hard to imagine having all of the encyclopedia sets ever produced and much more on a device the size of a sheet of paper and only slightly heavier. Not to mention mobile wireless capability, which makes access to text virtually unlimited (3G wireless capability is already standard on many of the first-generation e-readers below).


/The contenders/

Amazon Kindle (Photo: Jon 'ShakataGaNai' Davis under CC license)

The Kindle was one of the first devices to enter the market, and because of it's online store, and focus on title availability. The device itself currently comes in two models: a 6" version and a 10" DX version (priced at US$259 and US$489 respectively). Both are capable of displaying multiple formats including PDF and have limited 3G wireless access (mainly for book downloads).

Proprietary format: AZW (with Digital Rights Management).



Sony e-reader (Photo: Gdolck)

Until the end of 2009, Sony's e-reader had been the primary competitor to Amazon's Kindle. The device itself comes in multiple versions and prices, including a touchscreen option and 3G wireless. The downside is that the Sony store does not contain as many titles as the Amazon store and some of the top bestsellers are conspicuously absent. The upside is that its ability to read Adobe's EPUB format means that unlike with the Kindle, you have access to the growing list of ebooks available to 'borrow' for free at most major libraries (with a valid library card).

Proprietary format: BBeB (encrypted or unencrypted).



Barnes & Noble Nook (Photo: Ajai Khattri under CC license)

The Nook is Barnes & Noble's jump into the market of e-readers. The device itself is well-designed and features a six-inch screen with a smaller, 3.5" LCD touchscreen for navigation. The Nook entered the market in the 2009 Christmas shopping season, and although the software has drawn complaints, the hardware is considered robust. Barnes & Noble also features a competitive collection of e-books on its online store. Along with the Kindle and Sony Reader, the Nook rounds out the list of static-image e-readers that dominate the recreational reading market (other devices do exist).

Proprietary format: none, but supports PDB, EPUB and PDF.



Plastic Logic QUE

The QUE, by Plastic Logic primarily being marketed towards business users for digital documents rather than recreational book readers. It has been in development for over ten years and is likely to have the most advanced display capabilities of any device. It is currently available for pre-ordering and expected to begin shipping in April, 2010. There will be a 4 GB WiFi only version and an 8 GB WiFI + 3G version (retails for US $649 and $799 respectively). Both units are 8.5 x 11" and 1/3" thick with touchscreen controls. The device is also lighter than other e-readers because the screen is made of scratch-resistant plastic rather than glass. It's sure to make its way into quite a few executive boardrooms.

Proprietary format: none, but compatible with PDF, ePUB as well as most image and text formats.



Apple iPad

The iPad isn't really an e-ink device but it can still serve the purpose of an electronic reader. Frequent book readers will complain about shorter battery life and eye-strain due to the backlit LCD that refreshes over 60 times a second. Claims about eye strain in modern LCD devices aren't necessarily proven, however, and the ability to place the screen in a comfortable position certainly make reading easier than on a fixed position monitor. The iPad wasn't designed exclusively for reading but rather as a multi-purpose device including web browsing, video and music capability. While it looks to be a convenient little device, I don't see it as an instant success; at least not when marketed to the recreational reader. It's basically a big-screen iPod touch with 3G capability which probably isn't the same market for readaholics. An organic LED (OLED) display may hold the greatest commercial promise for a future generation of iPads when it comes to reading.



/The issues/

Price

While the prices of these devices will come down over time, most entry-level e-readers start at over $200 for a relatively small screen (about a five inch diagonal). Readers wanting something to read larger than a pocket Bible will need to spend up to $800 or more. Then will likely still need to pay even more for content, which typically include books as well as magazine and newspaper subscriptions. This is where a smart marketing model could really help the publishers and resellers. Readers should have the option to get a subscription that includes something like 3 books per month for a monthly fee that equates to 30% off the list price of individual purchases. Not all ebooks cost money though, many of the 'classics' have been released into the public domain (usually a period after the author dies or after the work was created depending on the country). In the past, publishers had still made money printing them, but in digital form they can typically be distributed for free. Google has made many of these works available for free download (PDF or EPUB) on its Google Books website. Many works of classical music are available the the public domain and available for free in the form of digital sheet music.


Copyright

This is a huge issue that could turn out to be disastrous to publishers and authors if it isn't handled properly. Publishers have privately been sparring over the selling price of their content with these device distributes. One of such instances became public when Amazon announced it was removing Macmillan e-books from its store. The issue was resolved with Amazon caving in to a price increase but publishers need to be extremely careful with their financial/pricing models. My advice would be for them to apply a really high multiplier or exponent to the cost policy variable to model the impact of illegal copying. Consumers aren't happy to pay the same price for an e-book as for a hardcover or paperback, and it could only be a matter of time before they revolt if the prices are too high. If illegal copying and distribution of digital books did become widespread, it would be virtually impossible to stop, given that the file size of text is much smaller than music and videos.

It's been just under a year since I posted E-Papyrus: Reinventing Paper, and since that time it's clear that this 'new reality' is here and exciting.