Thursday, May 28, 2015

The long-range drone that can keep up with a car and fly for an hour

A German team are aiming to build a faster drone that can keep going for longer by adding combustion engines. 

Consumer-grade drones are often limited as to how fast and far they can fly and how long they can stay in the air for.

Typically, high-end quadcopters like the DJI Phantom 3 Pro Professional can only fly for about 25 minutes and at no more than 50mph. A German company airstier is hoping to overcome some of these restrictions by building a drone powered by a combustion engine, rather than batteries.

The firm has launched a Kickstarter bid for yeair!, a drone driven by combustion engines that has a top speed of 100 km/h (62 mph), which can stay airborne for up to 60 minutes and carry up to 5kg in weight.

These capabilities could support new uses for drones, according to airstier: allowing the UAV to film scenes using professional cameras, to keep pace with a fast-moving cars or animals, to film sporting events for longer periods and transport goods over further distances.

Users will be able to plot routes for the yeair! drone on a map and download data from the flight using a tablet app - with the drone able to travel a maximum of 34 miles. Navigation is made possible using a GPS unit and the drone's onboard wifi allows it to connect to a tablet app at a range of 100 metres.

Legal regulations may prevent users from exploiting the range of the drone, with the US Federal Aviation Administration (FAA) currently banning the sale of drones that can fly beyond the operator's line of sight - although the FAA is reportedly in discussion to lift this restriction.

While combustion-powered drones can be more difficult to control as effectively as battery-powered UAVs, airstier claims to have tackled this limitation by developing a "electrically powered alternate/hub shaft". This shaft is "coupled to the combustor to relate accelerations and delay values", which the firm says enables its flight to be as stable as an all-electric drone.

The additional power of the combustion engines should also let the yeair! drone operate in stronger winds than is possible using consumer drones today. yeair!'s dual engines also allow for one engine to take over and keep the craft airborne in the event of engine failure.

yeair! will cost a similar amount to high-end drones, with backers able to secure a craft by pledging €1399. airstier has produced a prototype drone and estimates the finished product will start to ship to backers one year from now, in May 2016.

As with all Kickstarters, you are backing an ambition and there is no guarantee of receiving any goods for your pledge.

The specs

4.9 kg empty weight

5.0 kg peak load, 3.0 kg nominal load

100 km/h (62 miles) maximum speed

55 km (34 miles) maximum range

1.5 liter (0.4 gal) fuel tank, 25:1 gas/oil ratio with acoustic signal "full tank"

6,4kW/8.6 hp maximum power peak. 4x 1.6kW: 1.0kW combustion engines + 600 W BLDC engines 10ccm combustion engine (two stroke with ignition), 12000 Rpm self controlled successive engine start with running control for the combustion engines 4s 1250 mA/h Lippo-Battery for starting the combustion engine. Recharging not necessary.

Propeller Airscrew
13″ x 8″ three-blade for ducted fan construction. Aerodynamic and noise optimized.

Next-generation GPS chip for accuracy and quick readiness for use.

Programmable LED Position-Light front/back in different colors.

Swing-up feet for better sight and more speed, manual or automatic operation.

Integrated WLAN with 100m range for connection with tablet or smartphone.

Underbody 3x servoslots for 3-achs gimbal 1x extra servoslot for different applications. Different profiles are selectable. Power output from 4s battery. Short-circuit-proof. 14,8 V ± 4V

Wednesday, May 27, 2015

Head Mounted Displays: What’s the Difference between Augmented and Virtual Reality?

Image Credit: Wikimedia
As digital technology continues to seep into every aspect of our analog lives, it seems it was only a matter of time before it started to replace our plain old visual experiences with something a little more tantalizing.
Head-mounted displays, or HMDs, are an almost ancient piece of tech which have begun to see a reboot in the past few years as computers get more powerful, and the games inside them more visually spectacular by the day.
In this article, we’re going to cut through the noise and give you the basics of the HMD revolution. We’ll cover the terms you need to know, the history of where they came from, and how far the technology might be taking us next. So if boring old regular reality just isn’t enough anymore, maybe it’s time to take a dip into the world of the virtual and see where you end up on the other side.

Seeing things differently: a (brief) history of HMDs

Back in the 1960’s, a cinematographer named Morton Heilig had a crazy idea: what if instead of watching movies from the couch like everybody else, you could wear the experience on your head and have the content beamed directly into your eyeballs instead?
Since the earliest steps of the technology up until today, nearly every major electronics manufacturer has dipped their toes into the water with one device or another. Many are now defunct with names you’d never recognize, but a few standouts throughout the years include the Victormaxx Cybermaxx, Sony’s 3D TV viewer, and everyone’s favorite 90’s flop, the Nintendo Virtual Boy.
Image Credit: Wikimedia
If we’re going to get technical about it (and we are), there are actually three different classifications of HMD. First, there’s the classical head-mounted display, which utilizes a standard LCD screen to display images, movies, and 3D videos. Google Cardboard is a great example of how simple these types of devices can be, using nothing more than a $25 cardboard frame on which you can mount any compatible Android phone. 
Next there’s augmented reality, which in most cases (but not all, as you’ll find out later) is achieved by overlaying projected images on top of a pair of see-through goggles or glasses, creating an which effect gives the impression that digital content is interacting with the world around you.
Lastly, we come to virtual reality.
The key difference between a standard head-mounted display and what’s considered a full “virtual reality” experience is in the details of what each device does for the user. If you’re sitting back and passively watching a movie on a screen, you’re using a standard HMD. If you’re standing up, jumping around, and ducking out of the way as digital bullets whizz past your head, that’s VR. The distinction is the level of participation, splitting hairs between active and inactive consumption of whatever content is being streamed to the display itself.
It’s important to note that what makes this modern push for VR different from previous attempts, is that this time the devices are finally able to keep accurate track where you are in the real world, and then translate that data into movement or actions within the game or experience itself.
With that extra bit of capability tacked on, what used to be a static, controller-based movement system is transformed into a fully immersive experience, one where what you do in this world affects what happens in the other.

Virtual Reality

You peer over the edge of a cliff, with a sheer drop thousands of vertical feet down. The wind is blowing in your face, smelling like a mix of the jungle and a beach at the same time. You jump, and a magnificent pair of wings sprout behind you, carrying you into the clouds and beyond. 
This is the dream that makers of virtual reality devices have had since their inception, one that’s coming closer by the minute. Ivan Sutherland, considered by most to be the “father of VR” believed in a time and place when the lines drawn between man and machine would start to blur, envisioning computers and a system of displays that would create worlds so real, they would be virtually (pun intended) indistinguishable from real life by the layman. 
Fast forward half a century, and the drive for true VR has never been stronger. Three companies stand out from the rest of the competition, of which there’s already quite a bit to trudge through.
Image Credit: BagoGames
Up to bat first is the Oculus Rift, the perennial entry for this millennia from Doom’s John Carmack. If there’s any VR rig you’ve heard of, the Rift is probably it. For now the device is still in the development stages, though we’ve been promised that a consumer version should be here “soon” by the company’s PR team.
Next is Razer’s OSVR, which simply stands for “Open Source Virtual Reality”, because who needs name creativity when you’ve got a track record like theirs? Early reviews of the dev kit claim the OSVR is about on par with the DK2 of Oculus, which unfortunately for those in the know, isn’t exactly the highest of praise.
Image Credit: Maurizio Pesce/Flickr
Finally, there’s HTC and Valve’s “Vive”. Equipped with higher resolution screens and about a dozen more tracking markers than any of the rest, the Vive is likely the closest reference point we have for what consumer VR products will look like five years from now. From the reports of the few people who had the opportunity to try it on at this year’s GDC, it could be the great white hope that VR needs to break into the mainstream, albeit at a much higher price tag than the rest.
Image Credit: TechStage/Flickr
But, if full immersion doesn’t exactly sound like your cup of tea, another rapidly expanding sector of the market, called augmented reality, might just be the seamless blend between the best of both worlds you’ve been looking for.

Augmented Reality

Have you ever been sitting outside a restaurant watching people walk by and thought to yourself, “Man, this would be so much cooler if aliens were attacking the city and I had to fend them off with my virtual ray gun?” 
If so, augmented reality could be just the ticket.
Augmented reality, or AR for short, is a method of digital projection that happens inside an HMD, generally in the form of goggles, glasses, or a specialized visor. Many of the original AR loadouts of yesteryear were focused on military applications, designed to give helicopter pilots and ship captains more accurate methods of acquiring targets and tracking enemy movement. 
Image Credit: Microsoft
Nowadays, tech companies have an entirely new vision for the possibilities that augmented reality holds, hoping that with advances in computing power and miniaturization, soon the number of people wearing an AR-capable device will rival the same stats we see with smartphone ownership in 2015. 
Three of the most serious contenders in the space include Microsoft, Google, and a little-known outfit called Magic Leap, who are bringing their HoloLens, Glass, and “untitled super-secret project that will change the world forever” to the table, respectively.
Many thought that Google’s Glass would give the general public their first real taste of AR, but those dreams were promptly dashed when the search giant shuttered the program late last year.
Image Credit: Bill Grado/Flickr
So now the mantle has been passed to Microsoft, and perhaps to an even greater extent, Magic Leap. Both outfits have made some seriously lofty promises for their products, with the former claiming the HoloLens could “revolutionize the way we work,” while the latter seems to be almost entirely focused on the best way to play.
The implications of what technology like this could achieve once the kinks are worked out are massive, which is why giants in the industry are so keen on making it happen sooner than later. For consumers the benefits are fairly obvious: directions to a restaurant displayed as you move through the world, data about your jog fed to a display after every mile conquered, and even laser tag/Call of Duty mashup matches in your backyard with you and 30 of your closest friends. You get the idea.
Even more tantalizing, however, is the prospect that AR holds for professionals in design and manufacturing. Imagine drawing up a prototype for a new engine on a tablet, and then being able to hold a virtual mockup in your hands mere seconds later.
No matter what AR eventually does for us, it’s growing more obvious by the moment the potential the technology has to change everything we know about how we interact with our world and each other in the coming years.
Wrap Up
Whether you’re looking to spice up the world you live in or escape into another entirely, the melding of our basic sensory experience with graphical interfaces is sure to fundamentally alter the way we look at the world in the coming decade. The emerging landscapes of VR and AR are an exciting place to be right now, and every day it seems another company is patenting new methods of fooling us into thinking something’s there when it’s not.
Each have promised consumers a level of immersion unlike anything else we’ve experienced so far, and while the age of Virtual Boy and Total Recall may be shrinking in the rear view mirror, the era of true digital immersion is waiting just over the next horizon.

Tuesday, May 26, 2015

Cheap Oil Just Might End the Airline Profit Orgy

Low fuel prices tempt carriers to add seats. Are they asking for trouble?
Trudge aboard a packed plane with your pricey ticket and you can see why the industry is ecstatic. Brent crude remains around $65 a barrel, Americans are primed to travel, and the airlines’ earnings are sizzling.

What could possibly go wrong?

Amid the current profit bonanza, some investors and analysts are worried (or annoyed) that the industry is risking its longer-term profitability by flying too many seats in North America. In other words, they see backsliding after years of discipline and pledges by executives that a lost decade of red ink had taught them hard lessons about growth and market share grabs. 

Tempting the airlines to goose capacity: cheap oil. Jet fuel this year has cost them 31 percent less per gallon than in the same period in 2014, the Bureau of Transportation Statistics reported on Monday. Most of that savings has gone straight to profits; airlines haven't cut fares or eased fees. But are executives, giddy on the fumes, compromising future earnings with the buildup of capacity in the United States, one of their only consistently profitable markets? Expanded flying this year could yield an ugly hangover in 2016.

“To me, this is all the beginning of the unwinding of this great domestic market story of capacity constraint,” said George Ferguson, an airline analyst with Bloomberg Intelligence. “Management nature is to want more. The board always wants more. The CEO always wants more. ‘Go find me growth.’"

When times are good, there’s almost no cost to scheduling a few extra flights here and there. In the second half of the year, U.S. airlines will increase capacity by about 3 percent, led by JetBlue, Alaska, and Virgin America, even as the legacy carriers plan dramatic cuts in parts of Asia and Latin America, where a strong dollar and weak economies have dented profits on some routes. Domestic capacity is exceeding growth in U.S. gross domestic product for the first time in eight years, Wolfe Research reported last week in a client note bemoaning a lack of restraint.

This capacity creep, coupled with investors' fear that airlines may have hit the top of the current profit cycle, has left the Bloomberg U.S. Airline Stock Index down 3 percent so far in 2015. Shares of American, the world’s largest airline, have lost more than 8 percent, with United and Delta stock prices each declining more than 6 percent. “Lessons Unlearned,” read the top headline in a recent issue of the trade journal Airline Weekly. 

Not all the capacity growth comes from adding flights; airlines are swapping larger aircraft into some routes and adding seats to many jets. United is moving some Boeing 777 widebody planes from international service to fly on domestic routes from its hubs. And American President Scott Kirby has said the industry's effort to swap out smaller jets for larger and to add seats on planes is a one-off event that doesn't signal longer-term plans to boost capacity even further.

Airline profits will be robust again this year. U.S. carriers amassed more than $3 billion in the typically slow first quarter and will do even better this spring and summer. They should weather downturns better than ever. The industry has radically restructured itself into four large carriers, plus a half-dozen smaller carriers, and those permanent changes are expected to protect income during recessions. American Chief Executive Officer Doug Parker is now being paid only in stock, so confident is he that the good times will be silly good and the bad times won’t be so harsh.

But much of the airlines' current financial bonanza is due to years of keeping seat supply below customer demand, as measured by U.S. economic growth, helping to bolster fares and widen profit margins. Historically, demand for air travel grows at 1.1 times gross domestic product, says Raymond James analyst Savanthi Syth. Today, airlines are setting capacity growth at about 1.5 times GDP, she says, reversing a trend of many years toward keeping seat growth below demand. That strategy won't work forever. “What they did for the last four years is not sustainable. … You can’t continue to undersupply the market,” she says, because profit margins that grow fat inevitably inspire new competitors. “If there’s demand, then somebody is going to come in and fill it.” 

Syth points to Southwest, which expanded voraciously to all corners of the U.S. and now accounts for roughly 20 percent of U.S. capacity. Southwest stopped expanding for about two years as it integrated AirTran Airways, which it acquired in 2011. It is now firmly back in the growth business, with seat-miles (the industry's measure of capacity) rising almost 7 percent this year over last, and an additional 5 percent increase planned for 2016—most of it driven by the end of flight restrictions at Dallas Love Field, growth in New York and Washington, D.C., and the airline’s increase in international flying.

“Southwest is the wild card,” said Syth, who doesn't believe that the industry as a whole will oversupply the U.S. market. “Will Southwest pull back their plans and maybe park aircraft if supply seems to be outstripping demand?”

Southwest, whose fleet is nearing 700 jets, has "great opportunities that we have been investing in ... over the last five years, and now we want to take advantage of them," CEO Gary Kelly said last month, responding to questions about the company's capacity expansion this year and next. "The peak in the growth rate is here in 2015, and it begins to diminish next year, and then it diminishes, growth-rate-wise, again in 2017."  

Cheap fuel also tempts airlines to add seats and use planes more each day because increased flying lowers unit costs. Expensive items such as airplanes, ground equipment, and employees become more productive as they are put to more use. This math becomes even more appealing at a time of high demand, when fares are strong and it's all but free to expand “marginal flying” at off-peak times. Add it up and the profits start to look like cash flying out of an ATM machine.

“Airline executives probably saw an opportunity to make more money at higher margins than they ever dreamed of making, and they got complacent,” Wolfe Research analyst Hunter Keay wrote on May 8 in a note titled “Airline Bulls: Pray for Higher Oil Prices.” Keay is a longtime critic of airlines' use of GDP growth as a guide to capacity planning. As a result of the capacity growth this year, he wrote, “high oil is literally the only thing we can rely on to force airlines to behave in ways that make their stock prices go up over the longer term.”

Friday, May 22, 2015

10 mobile payment systems you need to know

Modern technology is moving us closer and closer to a cashless future. Here are 10 of the mobile payment products leading the charge. 

Nearly every day I am confronted with the fact that I am a rarity, the last of a dying breed. I am someone who still regularly uses cash to make purchases.

In today's society, that makes me a dinosaur. Mobile technology has driven advancements in the payments industry that are making it easier and easier to make purchases without ever opening your wallet.

The plethora of options doesn't necessarily mean that everyone is on board. According to data collected by 451 Research, many users are still uneasy when it comes to mobile payments due to security concerns. Still, the technology is moving forward and more vendors are accepting mobile payments everyday.

If you want to get started with mobile payments, you have to first understand all your options. Here are 12 of the top mobile payment systems available.

Google Wallet

One of the first major NFC-based payment systems, Google Wallet was released back in September 2011. You can use Google Wallet to make purchases online or in a store, and send money to friends and family. Some have argued that it will be overtaken by Apple Pay, but that may not be the case. In fact, Google recently acquired intellectual property (IP) from Softcard to better compete.

Apple Pay

Apple Pay debuted alongside the iPhone 6 in late 2014. Users with an iPhone 6 or later, or an Apple Watch, register existing credit or debit cards with the service and use it to make payments with one of those cards. To use Apple Pay, you place your device near a reader and place your finger on the fingerprint scanner to quickly make a purchase.


Known as the go-to payment system for eBay, PayPal also has a pretty useful mobile app. Users can snap a picture of a credit or debit card to add it to their account and make purchases or send money straight from their phone. PayPal has integrations with Uber, Airbnb, and StubHub for convenient payments.

Square Cash

Square Cash is a mobile payment option that allows users to create a unique username known as a $Cashtag. According to the Square Cash website, users can tweet out their $Cashtag for donations, or use it to pay their rent. You can also use it to pay someone for their services or simply send them some money.


A web and mobile payment system that is "built for developers," Stripe offers a host of tools and APIs to customize it for you or your business. Users can accept Bitcoin through Stripe. Additionally Stripe is integrated with companies such as Lyft, Instacart, and Postmates.


Dwolla is a payment network for moving money. It doesn't require a credit or debit card, rather, it connects directly to your checking account. Use an email address to transfer money for $0.25 per transaction. Or, if the transaction is $10 or less, it's free. Only one party pays the fee and you can use it to send money to people even if they don't have a Dwolla account.


Vodafone launched M-Pesa back in 2007. It allows users to deposit or withdraw money, transfer money, and make payments with their mobile phone. The actual account for the money is stored on the user's phone, and they use secure SMS messages to send money or make payments. The transactions carry a small fee as well. Very popular in some African markets, M-Pesa is huge in Kenya where the service first launched.


Connect your bank account or debit card to send payments with Venmo. According to the company's website, it's always free to receive money through Venmo and most of the time it is free to send money, depending on what credit card or debit card you're using. Sign up with Facebook or by using an email address.

Lifelock Wallet

After purchasing Lemon Wallet, Lifelock created the Lifelock Wallet. It acts as a cloud storage system for all the cards you'd normally see in a wallet. Your ID, insurance card, loyalty cards, and payment cards are all stored and accessed through the app. The app touts Lifelock's security protection and users can access their credit score through the app for $.99.

Samsung Pay

After acquiring the company LoopPay, Samsung will fold its Samsung Wallet to be replaced by Samsung Pay. A technology known as Magnetic Secure Transmission is embedded in Samsung's Galaxy S6 and S6 edge, and it allows users to pay with their phone at a standard magnetic stripe reader. The service was only recently announced and will likely launch this summer.

Thursday, May 21, 2015

The World Is Missing Out on $1.2 Trillion in Wages (BusinessWeek)

Some 61 million fewer people were employed in 2014 than there would have been had pre-crisis employment growth trends continued
Job seekers wait in line to enter the Choice Career Fair in San Antonio, Texas, U.S.
The global financial crisis of 2008-10 had a big impact on jobs. Employment growth has stalled at a rate of about 1.4 percent per year since 2011. While this compares favorably with the crisis period when that rate averaged 0.9 percent, it is below the 1.7 percent annual rate between 2000 and 2007, according to the International Labour Organization.
The slower employment growth since 2011 compared with before 2008 means there are 61 million fewer jobs in 2014 than there would have been had the pre-crisis growth trends been maintained, the ILO said. 
In 2013, that jobs gap corresponded to an estimated $1.2 trillion in lost wages around the world, which is equivalent to about 1.2 percent of total annual global output and roughly 2 percent of total global consumption.
Other highlights from the ILO report, which you can read in full here:
Global labor productivity growth declined from an average annual rate of 1.5 percent in the pre-crisis period to –1 percent during the crisis years. It rebounded to 1.4 percent between 2010 and 2014.
Wage and salaried employment is growing, but still only accounts for half of global employment. Between 2015 and 2019, an estimated two-thirds of net new employment growth around the world will be wage and salaried employment.
Part-time employment is widespread, particularly among women, and is generally increasing. In the vast majority of countries with available information, the rise in the number of part-time jobs outpaced gains in full-time jobs between 2009 and 2013.

Wednesday, May 20, 2015

Bajos intereses pueden impulsar fuerte crisis financiera mundial (Mercado de Dinero USA)

Según los banqueros hay elementos para pensar que los riegos de inestabilidad financiera han aumentado

Frente a la amenaza de una potencial burbuja financiera en el mundo las cabezas de los más grandes bancos y compañías de seguros de Europa pidieron a las autoridades económicas extremar controles frente a los bajos intereses, según ha informado Bloomberg.
Los jefes de empresas como HSBC, UBS, Deutsche Bank AG, Zurich Insurance y Black-Rock reconocen los beneficios de herramientas como las denominadas ‘macroprudenciales’, que han venido aplicando las economías más importantes del mundo para combatir la crisis financiera desatada en el 2008, señala el informe de Bloomberg.
Sin embargo, alertan que tales medidas deben flexibilizarse, o de lo contrario podrían limitar el crédito en formación y empujar la intermediación crediticia fuera del sector bancario hacia lo que se denomina la ‘banca a sombras’.
Las autoridades de los países que van desde el Reino Unido y Suiza a Israel y Hong Kong han usado estas palancas reguladoras para frenar el aumento de los activos, especialmente en el mercado inmobiliario.

Tuesday, May 19, 2015

Icahn Invests $100 Million in Lyft (BusinessWeek)

Icahn Backs Lyft’s Uber Battle With $100M Investment

Lyft Inc. raised an additional $150 million, led by an investment of $100 million from billionaire Carl Icahn, raising the stakes in the car-hailing service’s rivalry with Uber Technologies Inc.

The fundraising will help Lyft in a battle for market share with the much larger Uber. A Lyft presentation to investors that was obtained by Bloomberg News in April showed mounting costs for marketing the service. Lyft projects a 512 percent jump in net revenue this year to $796 million.

“With this additional investment, we remain focused on deepening our U.S. footprint,” Lyft President John Zimmer said in a statement Friday. As part of the investment, a managing director of Icahn Enterprises LP, Jonathan Christodoro, will join Lyft’s board.

The San Francisco-based company had a fourfold increase in active passengers on 2.2 million rides in December 2014 but growth was beginning to slow, the presentation for investors said. The document was prepared for a $530 million fundraising round announced in March that valued the company at about $2.5 billion.

Lyft’s other investors include Japan’s Rakuten, China’s Alibaba and the Silicon Valley venture-capital firm Andreessen Horowitz. Bloomberg LP, the parent company of Bloomberg News, is an investor in Andreessen Horowitz.

Past Conflict

Icahn and Marc Andreessen sparred last year over strategy at EBay Inc., where the Web-browser pioneer was a director. Andreessen resigned from the EBay board in October.
In addition to providing a window into its business, Lyft had some choice words for its chief rival. The presentation describes Uber as a “top-down model,” with an “exclusive mentality” and “anti-social culture.”

Uber plans to raise $1.5 billion in a new funding round at a valuation at $50 billion, a person with knowledge of the matter said May 9. The company is using cash to expand operations to cities across the globe and to fund acquisitions.

Icahn, known for activist campaigns that push publicly traded companies to boost shareholder returns, has invested in several technology companies -- from EBay to Apple Inc.

Monday, May 18, 2015

The New Organic Walmart Is Eating Whole Foods’ Lunch (BusinessWeek)

The pioneer of organic groceries has attracted bigger rivals, which are stealing its growth

Whole Foods Market

Over much of the past 30 years, Whole Foods Market co-founder John Mackey enjoyed wild success selling organic groceries to the masses. That brought media buzz, fast growth, and high profit margins to his grocery chain. It’s also attracted imitators. Now, with the likes of Kroger and Wal-Mart Stores muscling into everything from organic milk to sustainably raised salmon, Mackey finds himself fending off challenges from bigger rivals intent on eating Whole Foods’ lunch.
Just how well the competition is doing became clear on May 6 when Whole Foods reported that sales growth at stores open more than 57 weeks had slowed to 3.6 percent in the most recent quarter, well off the 5.3 percent gain forecast by analysts. Mackey also announced a plan to revive growth by starting a lower-priced chain aimed at millennials next year. The disappointing growth and seeming change in strategy spooked investors, who trimmed almost 10 percent from Whole Foods’ stock price on the day after the news.
“Business has really slowed down compared to what it used to be,” says Brian Yarbrough, an analyst at Edward Jones. “I fear they’re being a little complacent about what’s going on in the competitive environment.”
So far, Whole Foods has said only that its as-yet-unnamed chain for millennials will be smaller and more focused on value, convenience, and technology than traditional Whole Foods markets. They’ll also be cheaper to open and build, Mackey said.
With the new stores, Whole Foods is targeting younger consumers who may not be as dazzled by its organic offerings, particularly when many of those items are increasingly available at their neighborhood grocery stores, says Virginia Morris, vice president for global consumer strategy at retailing consultant Daymon Worldwide. “It’s not unique to millennials—they’ve grown up with it,” she says. “There’s no cachet.”
The grocer was founded in 1978 in Austin, Texas, by Mackey and a former girlfriend. It expanded quickly in the 2000s—there were fewer than 200 Whole Foods stores in 2006, compared with more than 400 now—as it helped introduce items such as kale and quinoa to mainstream Americans.
In its glory days, from 2000 to 2008, Whole Foods’ average annual sales growth was 20.4 percent. Stores opened quickly, as the company snatched up cheap real estate that defunct retailers such as Circuit City had abandoned. Those gains slowed to 9.9 percent in the fiscal year ended Sept. 28, 2014, the smallest annual increase since 2009. Kroger and Fresh Market, which sells high-end produce, both logged better sales growth in their latest fiscal years.
To hold on to shoppers, Whole Foods since 2014 has focused on lowering prices, especially on fresh fruits and vegetables. It also started running its first national ads, dubbing its campaign “Values matter.” But it hasn’t pulled back on the fancy amenities that have given it an image to match its prices. A new store in Boston, for instance, has a spa; many others offer valet parking.
Sales of organic foods in the U.S. jumped 11.3 percent, to $39.1 billion, last year, according to the Organic Trade Association. The problem for Whole Foods is that an increasing share of those sales is going to mainstream players in the U.S. grocery store business, which logged $1.07 trillion in sales last year, according to Euromonitor International.
Kroger’s natural and organic Simple Truth line has become a $1 billion-a-year brand. Costco Wholesale sells organic and grass-fed beef and organic coconut oil under its Kirkland Signature brand; its total organic sales were close to $3 billion last year. Even Wal-Mart is hawking everything from organic chia seeds to its Wild Oats Marketplace organic marinara sauce. There are about 3,800 Wal-Mart stores in the U.S. that have at least 30 Wild Oats items, the company says, plus about 2,300 Walmarts have separate organic produce sections. “You’ve got a number of competitors out in the marketplace that are growing very rapidly—Kroger, Sprouts Farmers Market, Trader Joe’s, Fresh Market,” says Bruce Cohen, senior partner at consulting firm Kurt Salmon. “It’s caused Whole Foods to pause.”
Whole Foods concedes that rivals are encroaching on its sales gains. “Everybody is jumping kind of on the natural and organic food bandwagon, and that’s really frankly due to our success,” Mackey said on a May 6 analyst call. He and co-Chief Executive Officer Walter Robb declined to be interviewed for this story.
Developing a grocer specifically for millennials could be a gamble. Americans under the age of 35 prefer natural and organic food, which often costs more, and seek more transparency on labels, according to recent Goldman Sachs research. Yet, while millennials tend to marry later and put off having kids, once they settle down and form families, their shopping habits aren’t that unusual, says Sucharita Mulpuru, a Forrester Research retail analyst. “It’s all delayed, but once those things happen, they spend just like their parents.” That means the biggest determinants of where they will shop will be value, convenience, and selection.
Even if Mackey is right about a need for stores tailored to a younger demographic, his new tack could present problems, says Edward Jones’s Yarbrough. The smaller locations will likely have lower profit margins and may cannibalize customers from Whole Foods’ namesake chain, he says.
Some analysts think Whole Foods may be taking aim at Trader Joe’s with its new concept. That 440-store chain appeals to young consumers who have broad, global tastes and like to hunt for items they might not find elsewhere, Daymon’s Morris says. But Trader Joe’s benefits from a perception that its products are cheap-chic, while Whole Foods continues to grapple with its “Whole Paycheck” image. Says Morris: “That’s something they really haven’t been able to shake.”
The bottom line: Sales growth at established Whole Foods stores slowed to 3.6 percent recently, far below the pace of organics overall.

Friday, May 15, 2015

Consumers fall out of love with tablets, but now businesses are smitten instead

Summary:Business use of tablets is now a reality, says IDC, but it can't make up for the dip in consumer demand.

Devices like the Surface Pro 3 are gaining ground in business, according to IDC.
Consumers aren't buying as many tablets as they used to, but now businesses are starting to buy more.
According to figures from analysts IDC, in the first quarter of this year the overall tablet market in Western Europe dropped 10.5 percent year-on-year. Shipments totalled 8.5 million units for the period - down one million on the first quarter of 2014.
IDC blamed the fall on "sluggish consumer demand" for new devices as individuals held onto their tablets for longer than manufacturers had hoped, or bought big-screen phablet devices instead.
But as consumers held back, business users began getting more comfortable with tablets: sales to businesses increased by more than 50 percent year on year - up from around one million units in the first quarter of 2014 to 1.6 million in the same period this year.
IDC includes hybrid two-in-one devices - such as the Microsoft SurfaceHP Envy X2, and Asus Transformer Book T100 - in its tablet figures. The share of the tablet market held by these devices remains small - IDC puts it at 5.9 percent, but said they are becoming more popular with businesses and consumers, with shipments up 44 percent year on year.
"Tablet usage for professional purposes is a reality," said Marta Fiorentini, senior research analyst at IDC. Deployments are growing beyond early adopters: "Adoption is far from being mainstream but we now see companies of all sizes choosing tablets and two-in-ones to support their normal business activities."
The UK, France, Germany, and Nordic countries remain at the forefront of this trend, Fiorentini said, adding adoption in other Western European countries tends to be limited to occasional deals. "The release of Windows 10 is likely to resolve most of the infrastructure legacy and integration problems that have so far hindered tablet and two-in-one adoption in some existing enterprises. The growth of the commercial segment is therefore expected to continue in the coming quarters, supporting overall market volumes in 2015 and beyond," she said.
Android tablets still dominate the market. IDC said that while Samsung, the largest Android vendor, "underperformed the market" in the consumer space, it showed strong growth in the enterprise. While Apple's iOS retained second place, IDC said the success of the iPhone 6 has partially impacted sales of the iPad Mini.
The rest of the market is represented by Windows devices, which IDC said posted strong double-digit growth for the third quarter in a row. The growth was the result of an increasing number of models available on the market running Windows, including new two-in-one hybrids like the Microsoft Surface Pro 3, but also theAcer T100, and Acer's Switch range.
Chrystelle Labesque, IDC's EMEA personal computing research manager, said the growth opportunity for tablets will come from enterprises and professional users, as vendors have significantly expanded their product portfolio with devices aimed at the segment.
She added that demand for two-in-one devices is gathering momentum driven by improved hardware as well as better pricing attracting consumers as well as professionals.
IDC said the tablet market could bounce back later in the year on the back of new models and renewals as existing devices reach the end of their life cycle. Increasing adoption of tablets and two-in-one devices for commercial purposes is also expected to improve the outlook, it said.