Hits & Misses
(Business 2.0) – [HIT] The hot handheld. Road warriors have long scoffed at Danger's Sidekick, saying it doesn't run enough applications. But kids love the instant-messaging-friendly smart-phone sold by T-Mobile. And Danger has been crafty about getting it into the hands of celebrities like Paris Hilton, who was recently spotted with a Sidekick II, the next-generation model that adds a speakerphone, a camera with flash, and globe-trotting connectivity. Hundreds of people lined up at a Santa Monica T-Mobile store in September to claim the first units. When the SK II rolled out nationwide the next day, prospective buyers who didn't arrive early enough were wait-listed for the $299 device. Analysts expect 200,000 to be sold by year's end, far exceeding initial projections.
[MISS] And the hot-under-the-collar handheld. For years Verizon Wireless has offered its customers a trade-off: A great network but lousy phone selection. So when Verizon announced that it would start selling Motorola's new v710, its first Bluetooth phone, the technorati were panting with anticipation. But the gadget aficionados stopped drooling and started cursing when they actually got their hands on the phone. It turned out that Verizon had intentionally crippled the Bluetooth features, forcing customers to use its paid-download services. One reviewer was so enraged he set up a $1,663.24 reward fund for the first hacker to restore full functionality (see www.nuclearelephant.com/papers/v710hackers.html).
[HIT] May the retailers be with you. Sure, we all know the plot: A ragtag bunch of rebels band together to become a powerful fighting force. But Lucasfilm has just proven it could live the story as well as tell it. The company behind the Star Wars franchise finally decided to reorganize its all-too-autonomous subsidiaries, resulting in its film and videogame divisions collaborating on the simultaneous release of the classic trilogy on DVD and a new videogame based on the films. With retailers giving the combination more shelf space than they'd have given either release on its own, the Star Wars products racked up a whopping $115 million in their first day on sale.
[MISS] Tooth decay. Oral hygiene is important, but so is brand maintenance—as Colgate-Palmolive has painfully learned. While engaged in a costly uphill battle with Procter & Gamble in the tooth-whitening segment—spending $60 million to launch the market-lagging Simply White brand and millions more in unsuccessfully suing P&G for false advertising—Colgate neglected the rest of its product line. Sales of its namesake toothpaste, once unassailable in the drugstore aisle, fell 2.4 percent during the past year, while P&G's Crest rose 6 percent. To fend off P&G, Colgate announced that it will boost its advertising and marketing budget by almost 20 percent. Worried that the spending will erode profits, investors sent Colgate-Palmolive stock down 11 percent after the announcement.
[MISS] Northwest, with attitude. Know that look you get when you tell your spouse he or she has put on a few pounds? That's the same icy stare Northwest Airlines got in August when it announced that it would start charging travel agents a fee of $7.50 for every round-trip Northwest ticket they booked. The reaction throughout the industry was swift and severe. Travel agents lobbied federal regulators to investigate the airline. And Sabre, which owns the largest computer reservation system, threatened to drop Northwest to the bottom of its listings, prompting both to sue. After a week of acrimony, Northwest abandoned the new fee.
[HIT] Forget Mike—I wanna be like Chuck. (Well ... sort of.) Nike has been riding the success of its Michael Jordan franchise for the last 20 years. But thanks to its canny 2003 acquisition of Converse, the company has a new high-flying (though long-deceased) endorser: 1920s basketball star Chuck Taylor. In Nike's most recent quarter, sales of non-Nike-branded merchandise were up 64 percent from a year ago, surging to $434.5 million. CEO Philip Knight said the gains were largely attributable to strong back-to-school sales of the world's first basketball shoe, the venerable Chuck Taylor All Star, which first hit the shelves in 1923.