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Building any car is tough. Building an electric car is tougher.
Automakers must devote time, skill, technology and financial investment to designing, engineering, and cutting costs for what is still far from a mainstream drivetrain.
Even Nissan, whose Leaf won GreenCarReports’ Best Car To Buy 2011, has pushed back delivery dates for the Leaf.
But a small Californian firm yesterday pushed its own compact all-electric car launch back from next month to sometime in the third quarter of 2011. And we think that puts them in a tough and scary position.
The announcment from Coda Automotive that its 2011 Coda Sedan won't hit the streets until late 2011 comes a week after both the firm's senior vice president of sales & marketing and the CEO resigned.
CODA has said little about the reasons behind this, except that it wishes to make sure the quality of its car is as high as possible.
We can’t say whether that may indicate problems with components, issues with the performance of prototypes, or just the management shuffle. But broken promises are certainly not good for reputation.
What’s the upshot? We won’t be seeing CODA sedans on the road any time soon, at least not in private hands. That’s a shame.
But we have to be honest: Over the past few months, we’ve become increasingly skeptical that CODA could deliver on its promise to bring the 2011 Sedan to market by the start of the holiday season. Why? Let us count the reasons.
(1) Very few anecdotal order stories
The 2011 Nissan Leaf and 2011 Chevrolet Volt both have stuffed order books. We regularly hear from, and about, buyers on the waiting list for one or other. But we have yet to hear from a single reader, advocate, or potential customer of CODA.
Yes, we know Enterprise Rental have ordered some, as have other fleet managers. But ouside of this, where are the hordes of eager retail buyers waiting for their car?
Anecdotal tales of pre-launch excitement, orders and test drives are often a great way of gauging the success of a car. So we're a little perturbed. Just how many retail orders are there? Why don't we hear anyone who has put up the $499 deposit for a CODA Sedan?
If that's you, let us know. We’d love to set the record straight.
(2) Management turnover
No, it's not uncommon for a company to change executives when switching from development to product launch. But two such senior executives leaving within days of one another surely indicates that something is not well.
What’s more, the resignations came just days before the 2010 Los Angele Auto Show, an important event for any automaker and particularly so for Coda, which is hosting a cocktail party and offering interviews with executives.
(3) Many press releases, no test drives
CODA has put out regular press releases, providing details to the media of when it planned to launch the 2011 CODA Sedan. We even have an impressive list of fleet purchases the company has booked.
But to date, CODA has not offered the media test drives--whereas the 2011 Nissan Leaf has now been widely reviewed and driven by most of the major national and international automotive media.
That’s surprising for any company that's about to launch an automobile, and it led us to suspect a while back that the December launch target would be impossible to meet.
(4) Higher price, but lower support?
Let’s get one thing straight: CODA is not a mainstream automaker. It has no model currently on the market; the 2011 Sedan is its first car.
Unlike Nissan with its Leaf, it has no franchised dealers, no company-run showrooms, and no nationwide support infrastructure for when things go wrong.
At fully $14,000 more than Nissan’s 2011 Leaf, CODA is asking its first customers to take an expensive gamble that a previously unknown automaker can provide the level of service and support that is taken for granted with the purchase of any car.
While Tesla Motors, another non-mainstream electric car manufacturer, has done pretty well with its company-owned showrooms and growing International support, it sells a $109,000 sports car. When you’ve paid six figures for a car, the service comes to you.
(5) Further delays mean a closing market window
In 2007, when the then-Miles XS500 was announced, it had an initial price of $30,000. Then it was meant to be in showrooms by the end of 2008, though the cost had increased to $60,000.
In 2008, we heard that the Hafei Saibao EV (the car we know now as the CODA Sedan), had passed an Insurance Institute for Highway Safety (IIHS) safety test. At that time, the car was still expected by the end of 2008.
Fast forward two years, and we’re waiting expectantly for the car. Yes, delays are normal in the automotive world, but we can’t help but think the delays facing Nissan's rollout of its Leaf are not the same ones facing CODA.
Delaying the launch for another nine months loses Coda its early-mover advantage, since about a dozen electric cars will be on the market by 2012.
And we’re not sure that small or startup auto firms can beat the big guys without some significant advantage in schedule, price, or technology. Can anyone make the case that Coda has even one of those?
This article originally appeared at All Cars Electric and is republished here with permission.
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See Also:
CODA Delays Rollout of Electric Car: Why We’re Not Surprised
The most interesting thing about last night's report that the ebook market will reach $1 billion this year wasn't so much that number -- through it's impressive, especially considering the growth rate -- but that Amazon has a full 50% marketshare there thanks to its Kindle platform.
When Apple announced the iPad with its iBookstore many people thought the inferior Kindle would be toast, but by letting people read Kindle books on any device, Amazon has preserved, and even arguably gained, marketshare. Today, most of the people who read books on iPad do it on the Kindle app.
The ebook market is a battle of the titans. It's Amazon versus Apple versus Barnes & Noble versus Sony. It also crucially involves all the big publishers, who are scared of going digital but know they must embrace it lest they go the way of the music industry, and so have been taking two steps forward and one step back.
But Amazon played beautifully every step of the game. And now, in a market that is growing very big, very fast, and probably has strong network effects, it has an early lead which makes us think it will end up dominating it. In fact, we think Amazon's marketshare will end up closer to 90%.
Here's how it happened and why we think Amazon can't be stopped.Join the conversation about this story »
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There is a war currently being fought in China's cyberspace. No, it does not involve the Great Firewall of China, nor does it involve Google's next attempt at market expansion in the Middle Kingdom. On the contrary, this war is being fought between two domestic Internet players: Tencent and Qihoo 360.
Over the past few months the two companies have been in a fierce battle to win users and their corresponding data. Qihoo 360's actions have forced Tencent to go to extreme measures and issue an ultimatum to Chinese netizens to choose either their software or that of Qihoo 360.
Guest author Joel Backaler writes The China Observer, an award-winning blog focused on Chinese technology trends and consumer culture. His writing has appeared in and he has been quoted by the Wall Street Journal China Journal, BusinessWeek, and Seeking Alpha. Joel is a Mandarin-speaking former Fulbright Fellow who has worked and lived in Taipei, Beijing and Singapore with Frontier Strategy Group. Follow Joel on Twitter.
Before we examine why this battle is being fought, let's take a quick look at who the two players are:
In response, Tencent said they had no choice but to make Chinese netizens decide between their service or Qihoo 360. If Tencent did not act, KouKou Bodyguard would spread rapidly through their user base dismantling the QQ empire. Therefore any computer with Qihoo 360's software would not be allowed to access QQ going forward. In an open letter to QQ users, Tencent proclaimed that rather than fight a battle on the desktops of its users (like Qihoo 360 did), Tencent would simply give the choice of which software to use to the users themselves.
At this point, Qihoo 360 has discontinued the KouKou Bodyguard tool, and it seems as though through the mediation of China's Ministry of Industry and Information Technology, the battle between the two Internet firms is subsiding.
While the dispute between Tencent and Qihoo 360 was not ideal for Chinese Internet users as the event unfolded, they will be better off for it. Just as China's melamine crisis in 2008 forced Chinese consumers to change their buying behaviors, the Tencent-Qihoo 360 saga will potentially have a similar impact on China's Internet industry.
It takes extreme situations to invoke a sense of seriousness around a particular issue. Chinese netizens will likely become more vigilant about what they are downloading, where the software comes from, and what data they may be potentially sharing. This type of change will not happen over night; however, this may very well mark the beginning of a safer Chinese Internet.
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We ran this post a couple of weeks ago. In light of the latest report that AOL just hired advisors to help it figure out how to grow faster and merge with Yahoo, it seemed to make sense to run it again...
The two struggling Internet giants of the 1990s, Yahoo and AOL, should merge.
Immediately.
(In fact, it's ridiculous that they haven't already).
This idea isn't new--we've been calling for it for three years, and, according to Kara Swisher, "big investors" are now calling for it, too.
"Big investors" want Yahoo and AOL to merge, AOL CEO Tim Armstrong to become CEO of the combined company, and Yahoo CEO Carol Bartz to become Chairman (which would be in keeping with what Yahoo's board is discussing anyway). We would certainly be open to that idea--assuming Tim can persuade us that he is tough enough to quickly and efficiently make the big restructuring moves (and cuts) that the combination would require.
But the management structure isn't as important as the combination itself.
Here's why the companies should merge:
Yahoo and AOL are both in the same business, and it is a business that benefits greatly from scale. Yahoo and AOL are both basically media companies. They both use technology extensively, but their core competency is producing content to attract an audience and then selling display ads against that audience. They also both operate duplicative mail, instant-messaging, sports, finance, news, maps, and other services, all of which currently compete with each other. That is senseless. By combining, Yahoo and AOL would achieve greater scale and reduce duplication.
There are currently 4-6 big generalist destination web sites, and that's at least two more than there should be. The big destination sites are: Facebook, Google, Yahoo, Microsoft, and AOL (and, increasingly, Twitter). Facebook and Google have clearly differentiated businesses. Yahoo, Microsoft, and AOL don't--they're still trying to be all things to all people. By investing hugely in Bing, Microsoft has picked its horse: It wants to compete with Google in search. Yahoo and AOL, meanwhile, have outsourced search to focus on content and display ads. That leaves Yahoo and AOL as the major competitors in content and display advertising. They both would be stronger--and they both would eliminate a major competitor (in the US)--if they combined forces.
There is huge and needless duplication of services at AOL and Yahoo: "Portal" page, finance, sports, entertainment, celebrity gossip, games, mail, instant-messaging, ad network, search window (outsourced), chat, etc. There is no reason for these services to be duplicated. And by splitting the market, Yahoo and AOL are splitting the market and thus losing more ground to their competitors. Take "mail," for example. Yahoo Mail and AOL Mail are critical traffic drivers to both company's content empires. They keep users coming back many times a day. But both Yahoo Mail and AOL Mail have lost ground to Gmail, Facebook, and Twitter, and Microsoft Outlook is still a major competitor. Left on its own, AOL Mail will die: AOL just doesn't have the resources to keep it competitive with the offerings of far-richer companies like Microsoft and Google. Yahoo Mail may survive, but it would have a better chance with the added scale and resources of being combined with AOL Mail. And the same can be said for instant-messaging, voice-chat, and all of the other areas above.
AOL is affordable, even for Yahoo. AOL's enterprise value is about $2.4 billion. Yahoo's is $16 billion. Yahoo could probably get AOL for $3 billion, maybe $3.5 billion. That's only 20% dilution. And if Yahoo didn't want to take the dilution, it could always buy AOL for cash. Yahoo doesn't know what to do with its cash anyway. (It might have to borrow a bit of money to pay cash, but money is free right now. Alternately, it could sell off its Alibaba stake and raise the cash that way. The stake adds no strategic value whatsoever.)
The combination would be instantly accretive for shareholders. In combining, Yahoo and AOL could not only boost revenues, but cut hundreds of millions of dollars of costs. Both companies are already gushing cash, so the combination would immediately goose cash flow.
The combination will eliminate a major competitor for both companies--both in display advertising and, importantly, in the consolidation of the burgeoning online content industry. AOL just bought TechCrunch for ~$40 million. Yahoo should also have bought TechCrunch--and we suspect that AOL's move might just wake Yahoo's M&A team up. In future sales, therefore, AOL and Yahoo might be competing with each other for companies like TechCrunch. That will drive prices up...unless they're working together.
Combining AOL and Yahoo would make the combined platform a "must buy" for any display advertiser. The display market isn't growing as fast as the search market, but it's still a huge and fast-growing market. Right now, the two companies' sales forces are duplicated. They needn't be. And the combination would offer advertisers even greater reach, inventory, and targetability. This, in turn, would reduce content production costs as a percentage of revenue.
The combined search businesses would have (slightly) more leverage to get better terms with Google or Microsoft. AOL only owns 3 percent of the US search market, but that 3% is still worth ~$500 million a year. Search is an economy-of-scale business, so the added scale would likely allow the combined company to squeeze better terms out of Microsoft or Google.
The combined distribution business would have more leverage with Hollywood, the music industry, and other content creators. Why is the cable industry so powerful? Scale. Once again, the more people you reach, the more valuable you are as a distribution platform. This combination would bring more distribution scale.
AOL's New York media headquarters would give Yahoo an even stronger beachhead in the media and advertising capital of the world. New York still matters, especially in this industry.
Yes, putting the two companies together would be challenging and require painful cuts. But it's not rocket-science. And it also wouldn't involve combining enormously different cultures and businesses, the way, say, the disastrous AOL Time Warner merger did. These two companies are essentially in the same business. As long as management took a disciplined approach to the integration, the merger would stand a good chance of being very successful.
Unless it radically refines and focuses its business, AOL must combine with someone--Yahoo or Microsoft. There is no way it can survive as a generalist all-things-to-all-people brand when it is so much smaller than everyone else in the business.
Yahoo has less need to do this deal--Yahoo already has enough scale--but the combination would help Yahoo. And, as discussed, it would also eliminate a major competitor.
Merging Yahoo and AOL is not "the answer" to both companies' woes. Once they combine, they'll still have to execute. But it's a good step toward for both companies.
They should do it immediately.
See Also:
Well, AOL, We Love That You're Playing Offense Again--But We Still Don't Know What You're Doing
Yahoo's Board And Partners Are Getting Sick Of Carol Bartz's Mouth
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