In The Headlines

Gillette Turns the Razor Blade Model Upside Down

Procter & Gamble (P&G), which has not done much in the way of innovation since the Swiffer in 1999, has a new Gillette razor in the works. The Wall Street Journal learned from internal company documents that the new razor sports a relatively standard face trimmer mounted on an orange ball bearing. Dubbed the ProGlide FlexBall, the unit will sell for between $11.50 and $12.60 when it hits shelves in June, according to the Journal. The company is touting “optimized stiffness” and just the right amount of “damping,” plus 23% more skin contact, specifications that suggest the sophistication of a sports car.

But here is the true innovation. Gillette’s new razor will use P&G’s current blades, a total departure from the notorious razors-and-blades model that has characterized the segment since the late nineteenth century. The razor has typically been just a cheap vehicle to sell expensive blades, locking customers into a proprietary platform. Every few years, the consumer goods honchos gather around a boardroom and say, “OK, it’s time to add another blade,” creating great material for the comedians at places like the Onion to poke fun, and people rush out and buy the thing en masse.

But that brilliantly simple business model may finally have worn thin, thanks to e-commerce startups such as Dollar Shave Club and Harry’s. With a heavy dose of humor, some cheap Asian suppliers, and sharp customer service, these companies started convincing consumers that razors were a commodity, not high science. In October, Dollar Shave Club had 330,000 members and gathered another $12 million in venture capital.

Meanwhile, Gillette’s revenue from its grooming segment—mostly razors and blades—dropped in its last fiscal year for the first time in five years.

This is why Gillette’s new ball-bearing device is so fascinating. Its launch suggests those cheap blade subscription services have been trimming the brand’s business. Gillette has now cobbled together a razor-blade subscription service of its own via retail channels such as Amazon.com and Drugstore.com.

Realizing its brand power is threatened on blades, P&G made an astute shift to focus on the actual razor and designed something that cannot be easily knocked off, particularly if Gillette’s patent attorneys were involved in its development.

The one thing that P&G has not changed is its marketing strategy. It is not bootstrapping a viral campaign with a small chunk of venture capital. It has set aside $200 million to make its customers take notice—something scrappy startups cannot do.

Google’s Chrome OS Takes Aim at Microsoft and Apple

Google’s incredible ascent to the leadership position in operating systems for mobile devices is well chronicled. The company’s Chrome web browser has attracted hundreds of millions of users, and today has nearly twice as many users as Microsoft’s once seemingly unbeatable Internet Explorer, whose market share has shriveled from about 68% to 25%, according to StatCounter. The Chrome browser helped remake PCs into devices on which web apps such as Google’s Gmail, Docs, and Maps run faster and more easily, making them viable alternatives to desktop software from Microsoft and others.

Now Google has pushed its web-centric vision further with Chrome OS. As with the browser critics scoffed when the operating system made its debut. No longer. Chromebooks (Chrome-based laptops) have been surging in popularity. Over the holidays in 2013, two Chromebook models were the No. 1 and No. 3 bestselling laptops on Amazon.com, and they are being adopted in schools and businesses around the world. The NPD Group estimates that in February, they accounted for 5.4% of notebooks sold at U.S. retail outlets, up from 3.5% a year earlier. In sales through resellers to businesses and educational and government institutions, Chromebooks accounted for 33.5% of notebooks, up from 3.6% the year before.

Chromebooks are made by Dell, Hewlett-Packard, Acer, Samsung, Lenovo, and others. Google earns no direct revenue from the laptops, the operating system, or its free browser. But Chrome and Chromebook users on average run more searches and spend more time using Google’s ad-supported services, and are more likely to buy music and movies from Google’s Play store. “Chrome is extremely important and strategic,” says prominent venture capitalist Ben Horowitz.

Google built Chrome to bend the arc of tech history in its favor. A cloud-computing pioneer, Google bet early that virtually everything done on PCs would eventually be delivered over the Internet. A decade ago it began developing web apps to rival Microsoft’s software cash cows like Word, Excel, PowerPoint, and Outlook. But Google believed the transition to the cloud was not happening fast enough, in part because web browsers like Internet Explorer, Mozilla’s Firefox, and Apple’s Safari were slow to innovate. Chrome was its answer. It leapfrogged rivals in speed, security, and capabilities.

The success has caused rivals to ramp up their capabilities, which Google says was its hope all along. The company made Chrome “open source” so rivals could see and appropriate its innovations. Says Linus Upson, who leads the Chrome engineering team, “All of our products and services get better if you are using a better browser.” Chrome had another, less public mission: to defend the search engine that accounts for most of Google’s $59.8 billion in 2013 revenues and $12.9 billion in profits.

Chromebooks run web-based software that does not have to be installed or upgraded, and the use of web software means data is always backed up. The notebooks boot up quickly and can be shared easily among different people. Google is now making Chrome OS capable of running apps offline. A growing number of developers have developed Chromebook-specific apps, and there is an added benefit. These apps can also run on any computer equipped with the Chrome browser.

While Chromebooks are currently a small part of the PC market, they could be the vehicle to make a major dent in Microsoft’s dominant position on the desktop.

Sources:
1. http://buswk.co/1kR5BUb – BusinessWeek
2. http://cnnmon.ie/1kTYyIf – CNN Money

The Good News Is . . .

• U.S. manufacturing output rose for a second straight month in March signaling a recovery from a long winter that had dampened activity. Factory production increased 0.5% in March, according to data from the Federal Reserve. Overall industrial production was up 0.7%, beating analysts’ expectations. February’s industrial production was revised upward to a gain of 1.2% from a previously reported 0.6% rise, due to stronger gains for durable goods manufacturing and for mining. Capacity utilization at factories also rose to 79.2% from a revised 78.8% in February.

• American Express Co., a global credit card services company, reported earnings of $1.33 per share, a 15.7% increase over year-ago earnings of $1.15. The firm’s earnings topped the consensus estimate of analysts by $0.03. The company reported that revenues were $8.2 billion, an increase of 4.0%. Management attributed the company’s performance to increased card member spending and disciplined cost controls.

• Holcim and Lafarge, two of the world’s largest construction materials companies, have agreed to merge. Holcim, based in Jona, Switzerland, near Zurich, and Lafarge, which is based in Paris, rank among the world’s biggest suppliers of cement and related products like stone, gravel and sand. The two companies had combined worldwide revenue last year of more than $43 billion. Both Holcim and Lafarge have been hurt by weakness in the European economy and are seeking to fend off inroads from lower-cost Asian competitors. After selling assets to assuage antitrust concerns, the combined firm will be the world’s largest cement maker.

Sources:
1. http://www.cnbc.com/id/101588170 – CNBC
2. http://www.cnbc.com/id/18080780/ – CNBC
3. http://amex.co/RDiJ52 – American Express
4. http://nyti.ms/1mqG6ZF – NY Times Dealbook

Planning Tips

Tips for Detecting Medical Identity Theft

A thief may use your name or health insurance numbers to see a doctor, get prescription drugs, file claims with your insurance provider, or get other care. If the thief’s health information is mixed with yours, your treatment, insurance and payment records, and credit report may be affected. Below are tips for protecting your medical information.

Never post anything online that you do not want made public – While the HIPAA Privacy and Security Rules are in place to protect and secure your health information when it is held by your health care provider (such as your doctor or hospital) or health insurance company, those laws do not apply if you share your health information with an organization that is not covered by HIPAA. For example, if you post that information online yourself — such as on a message board about a health condition, it is not protected by HIPAA.

Password protect your medical information – If you have health information stored on your home computer or mobile device—or if you discuss your health information over email with your healthcare provider—simple tools like passwords can help keep your health information secure if your computer is lost or stolen.

Be careful sharing medical information over the phone – When someone is asking you for personal or medical information over the phone, be sure you verify the source before sharing that information. Safeguard your medical and health insurance information and shred any insurance forms, prescriptions, or physician statements.

Review all medical claims – Request a copy of your prescription or medical claims history by calling your appropriate insurance provider. Review your claims history for inaccurate information, such as hospitals or doctors you have never visited or prescriptions you have never filled. If you find false information, contact your provider at once.

Be alert for any unauthorized disclosures of your medical information – Request an accounting of disclosures of protected health information from your providers, such as hospitals and doctors. This will help you know with which organizations or other providers your doctors have shared your personal information and medical records. If you are unsure why your information was shared with another organization, be sure to question the disclosure.

Sources:
1. http://bit.ly/1jp6crP – protectmyid.com
2. http://bit.ly/1mqFVxq – healtit.gov
3. http://1.usa.gov/1qVAqsA – consumer.ftc.gov
4. http://bit.ly/1jYyhcE – privacyrights.org
5. http://1.usa.gov/QqhaGA / – oig.hhs.gov

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