The Long Tail

The internet has changed a lot of business models. A number of companies that used to just be "middle men" have had to find new businesses. Ebay has made selling junk a new model. All this is spelled out in the book called The Long Tail.*

The Long Tail is about how when costs dramatically drop, companies gain the ability to offer more products. Ebay incurs almost no cost to offer another auction. Craig’s list incurs almost no cost to list another item. The number of unique items being offered exploded.

The Long Tail addresses three phases of the market: the early times when costs are very high, a middle time when costs are lower but still significant, and a third time when costs dwindle away to nothing.

What does this have to do with terminal programming? Actually, a lot. When a terminal is first offered on the market, the costs for the software are quite high. The programmers have to find out which progamming methods actually work, which ones have bugs in them, and which ones do not work. That time is expensive.

Once the majority of bugs have been worked out, the costs to develop a new application for a terminal are lower. When a terminal is solid, the costs drop lower as code libraries are developed and similar applications can be used as models. That is why the Tranz terminals are still the cheapest terminals for which to develop an application.

The same thing holds for merchant acquiring. Once a platform is solid, it costs almost nothing to host another merchant on that platform. Thus, we have the constant pressure to consolidate. First Data, and others, have grown bigger and bigger by buying up other acquirers.

What about those who want to start their own business? The Long Tail points to how to spend money to get the most impact. It can be fun to spend money on the latest technology. Technology people love to update technology so that they can work on the newest stuff; however, that updating needs to be tempered. If the customer’s needs do not require the latest technology, use what works and is cheaper, and save the money.

But this is not a new phenomena. The same thing happened with the first mail order catalogues. The same thing happened with the telegraph. When costs drop, new forms of business are developed and the number of products available to people jump. As the costs of building a terminal and hosting system have dropped, many more companies are able to offer services to store merchants.

To explore how the costs have dropped in the merchant space, give us a call and we can discuss your needs.
*Anderson, Chris. The Long Tail: Why the Future of Business Is Selling Less of More
New York: Hyperion, 2006

Its 3 AM, do you know where your laptops are?

The dogs may be barking outside your window, but that doesn’t mean that your data is safe. Laptop thefts have been rising quickly and intrusion attacks are rising even faster.

As more companies become "virtual" (no dedicated office space) and more of us carry company data on a laptop or phone, more data is being stolen along with the hardware. The costs of that stolen data can be quite high. Just look at the number of high profile laptop thefts where personal data was compromised.

To manage that data many companies are turning to security software. There are a number of software systems which encrypt all data on a system. Other software quietly reports where the laptop is located. If the laptop is stolen, it can be traced. Companies in this business boast about recovering stolen laptops with the data safely encrypted.

We encourage our customers to consider carefully whether or not they need to protect the data on their systems in the event that a laptop is lost or stolen. For too many, the value of the data being compromised is far greater than the cost of the laptop.

Risky Coolness

We all know the cool factor in transportation: fancy cars, well painted skateboards, the right type of 'cycle. The Segway is a cool transport. It's expensive (thus rare) and you ride it by just leaning into the way you want to go. It is being recalled due to a software glitch. Doing certain things will cause it to change from a cool tool into a bucking ride. People have broken bones while being bucked off.
All models were recalled to fix the software.

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Dave Randolph,
President, Prairie Trail Software

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