Wednesday, March 26, 2008

CHANGING TIMES

"We spend our time searching for security and hate it when we get it."
-John Steinbeck

Portable Cell Phone Booth
Bob Dylan wrote that the times, they were a-changin', and philosophically he was right. The shift was away from modernist thought to post-modernist thought and relativism. Traditional values and Christian worldview gave way to secularist values and worldview. Yet through all that, popular culture remained remarkably similar. Television, movies, rock music, the same basic brands parents and grand parents knew all were around through this transition. Sure, the ads were different and the content more liberal (both politically and in terms of pushing boundaries) but ultimately much remained the same.

As we move into the 21st century and the 3rd millennium AD, we're seeing many of the old institutions stumble and fall. Newspapers, who for over two hundred years held sway as the primary source of news and information, are struggling to continue. Television is holding less attention as the Internet makes the same content available on demand (with fewer ads).

Recently even new brands like Sirius and XM radio have stumbled, with the two major companies merging (and XM likely to vanish as a brand). Even cell phones, a phenomenon that really only took off in the last fifteen years is seeing casualties, as Motorola is looking at selling it's part of the market since it hasn't done well. Internet stock trading sites like Quick and Reilly didn't make it.

Even the old brands our parents grew up with are changing and fading. The site 24/7 Wall Street has a list of the brands that we might see disappear soon. Douglas McIntyre writes:
K-Mart is one of the two big brands at Sears Holdings (NASDAQ: SHLD), Eddie Lampert's failing retail play. Based on same store sales for last year, K-Mart is the less successful of the two retail operations. Spending to promote K-Mart and Sears may cost more that the holding company can afford. It certainly makes sense to kill off the K-Mart name and re-label all of the stores with Sears. It could save hundreds of millions in promotion dollars every year.

Dodge is part of the Chrysler company which was recently bought out by private equity firm Cerberus. Chrysler management has already said that the company has too many brands and too many dealers. It is trying to cope with a vicious downturn in the US auto market. Keeping a car brand means huge advertising and marketing costs and product development. Dodge vehicles will probably be re-branded as Chrysler and Dodge will go the way of the Dodo.

Circuit City (NYSE: CC) has been synonymous with electronics retail, but companies like Best Buy (NYSE: BBY) and Wal-Mart (NYSE: WMT) have brought too much marketing muscle and wholesale buying power to the industry. Outside investors are already circling Circuit City trying to "improve shareholder value". That means that there is a good chance the chain will be sold. The price of the company's shares has already dropped from over $30 less than two years ago to just over $4. Best Buy could be the most logical buyer by keeping the locations that do well and closing the rest. Virtually all the merchandising, management, and public company costs would go away as would the Circuit City brand.

Gateway was recently bought by Taiwan PC firm Acer. Some investors may not remember when Gateway was considered a peer of both Dell (NASDAQ: DELL) and Compaq. In 1993, Gateway was in the Fortune 500. Acer will not keep the Gateway brand and its own. The dual promotion costs are too high. Starting soon you will be buying an Acer PC online or at your electronics retailer.
Other major companies he mentions are Old Navy, Countrywide Insurance, and even Vonage. These are companies that aren't performing well and might be absorbed in mergers or simply sold off and disappear.

Institutions people were so familiar with they don't even notice them any more like phone booths and the home phone have begun to disappear entirely. Where will Superman change? Network nightly news shows are showing less and less profit while costing more and more - executives are looking at 24 hour news shows that produce more content for less price, and thinking about how to strip down the price.

The ideas of culture change and shift over time, but institutions are what make a culture familiar and comfortable; we're seeing a lot of changes in those institutions, rapidly. Much of this is due to the internet age, some of it because technology is leaving them behind, and some are because companies are moving overseas. The future looks different than we remember, and that's not such a bad thing. I'm sure you've noticed other things that are changing.

Now if only we can get rid of gas stations and move on to something better than the antique internal combustion engine.
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