Pricing – Page 4 – Digital-Lifestyles

BT Launch Communicator Residential VoIP Service

BT have launched new VoIP service called Communicator – bundled with Yahoo Messenger they claim that it makes calling from your PC easier. It certainly won’t make it cheaper as BT will bill you at exactly the same rate they bill for calls from your home phone, despite giving a clear warning on their site that PC calls aren’t as good. So, I have to ask – what’s the point?

BT are selling the service on convenience – the subscriber’s PC becomes an all-in-one communications centre with instant messaging, email, voice calls, and call management integrated into one product. Additional features include internet call barring and waiting – allowing you to block calls to your PC, and to notify you’ve got someone else waiting to speak to you when you’ve got a call. Never ones to miss a trick, these two extras cost UK£1.75 (€2.62) a month each, if you don’t already have them on your usual line.

BT also use the quality issue as an opportunity to recommend upgrading to a broadband connection: “The quality of calls made with BT Communicator may not be as good as the quality of traditional phone calls. BT Communicator call quality may be better on a broadband connection.”

People registering now get a free month of calls – after that, the service is charged like a normal phone service, with calls showing up on your normal bill as “Clic2call” items.

BT Communicator

Skype – free internet calls

Apple’s Q3 – and the new G5 iMac

Apple’s Q3 results are out and they’re good – the quarter saw them shipping 876,000 Macs, the highest unit shipment for three years, increasing their Macintosh revenue by 19%.

US$60 million (€48.5 million) of Apple’s income came from music accessories and other related items – showing that iPod demand is far from slowing.

Steve Jobs said: “It was an outstanding quarter-our highest third quarter revenue in eight years. Our Mac-based revenue grew a healthy 19 percent, and our music-based revenue grew an incredible 162 percent. We’ve got a strong product portfolio, with some amazing new additions coming later this year.”

Those of you who have been holding off buying a new Mac in the hope that the new iMac models will feature G5 processors can finally dust off the piggy banks. Although IBM has had manufacturing problems, resulting in a shortage of G5 processors and G5-based Macs, the new model is expected to ship in September.

Apple normally doesn’t pre-announce new products as it tends to hurts sales of the previous model – though in this case, the previous iMac has ceased production.

Apple’s results

UPDATED: BT Cuts Broadband Prices By Up to 25%, but caps downloads.

With many companies getting in on the cheap broadband bandwagon, BT has been losing customers to upstarts like Wanadoo and Tiscali. In a effort to attract more customers, and keep the ones that it has, the British telco has announced cuts across their range of consumer broadband packages. And about time too, as they were the most expensive provider out there.

The standard BT Broadband package is down from UK£27 to UK£25 (€40 down to €37.30) for a 512k connection, whilst the BT Yahoo! Broadband 1mb product gets cut down to £30 from £41 (€44.75 down to €61.16) – more than a 25% reduction.

No doubt BT’s broadband competitors will react almost immediately with price cuts of their own, in order to keep winning business, but the question is: how low can it go?

UPDATE: The bad news is, that bandwidth is now capped.

BT have written to their customers to explain:

“So that we can continue to offer our best possible price to customers, we’ll be introducing a usage allowance of 15GB of data a month. This is more than enough for the vast majority of our customers – for example, you can still download up to 3,000 music tracks every month. ”

“You’ve absolutely no need to worry: the usage allowance will only be applied from early 2005 and, based on your current usage levels, you won’t be affected by this change to your Terms & Conditions.”

The danger here is – what happens when you want to view video on demand on your PC? At 2 megabits per second, a 2hr film will use up 1.9 gigbytes of storage, so you’d get just under nine films a month and no browsing or music. We’ll be coming back to this and exploring it in greater depth in the next few days.

BT’s broadband pricing

Peppercoin Aiming for More Efficient Micropayments

The basic flaw with small monetary transactions, whether internet related or not, is that the processing charge levied by banks and credit card companies eats a big chunk of the value of your original sale.

The road to creating an efficient micropayment system is littered with the corpses of those who didn’t make it – ecash, digicash – weathered corpses stripped clean from their deaths in the late 90s.

Yet, deep down inside, we know that micropayments must work. Like the first farmer who experienced frustration when he tried to pay for some wood with a cow, only to be told “Sorry mate, I can’t change that – have you got anything smaller?”, we know there must be a way of making transactions more efficient.

Peppercoin, backed by the R in RSA, Ronald Rivest, have brought the micropayment system up to the 21st century, and have launched version 2.0 of their service. Peppercorn 2.0 is aimed at online retailers who shift low-priced digital content and physical goods, or offer subscriptions and pay-per-use services – so it won’t just be ringtones then.

The company has concentrated on making the experience as transparent as possible for the user, as customers can use their credit card to pay a merchant without having to register or create an account. Neither do they have to pre-deposit any money to get started – I can think of at least two micropayment systems from about 1997 that owe me at least US$3.

Merchants and vendors don’t even have to be web-based – one of the key applications of Peppercoin is in coin-op games. The new version of Golden Tee Golf (coming to a pub near you) will feature the Peppercoin system to provide cashless purchases. If I’m hearing you say big deal, then consider that punters spent US$350 million (€288 million) playing this one game last year alone. Peppercoin are well aware that when you allow people to use their credit card at point of sale, they will usually spend more.

The new service works by aggregating low-priced transactions across many consumers, merchants and payment providers, reducing the average processing fee for each individual sale. Customers pay by entering their credit card details online, or by swiping their card through a reader on the device they are paying to access.

Customer service is cleverly automated to keep costs down, with integrated bills and automated pre-dispute resolution dealing with most cases before expensive people have to get involved.

How efficient is the payment system? Peppercoins fees work out at about 10% of a US$1 transaction, which the company claims is 70% less than the usual card not present processing fee.

Peppercoin

A US$500 PS3?

A new report from industry analysts Wedbush Morgan is predicting that the usual things will happen when a new games console is released: it’s be very expensive on début, and decline in price afterwards.

WM’s report, The Definition of Insanity: Why the Next Console Cycle Will Start Off With a Whimper, bases its pricing of the PS3 on an assumption that it will be like Japan’s PSX – full of extra functions. I think this won’t be the case at all.

The PSX has a digital tuner, has PVR functionality and a DVD writer and is marketed as a home media centre that plays games. Gamers aren’t too worried about having a PVR that plays Killzone 2, PVRs appeal to a slightly older audience. Gamers aren’t too bothered about their games console having a DVD writer in it either – they have PCs for that.

WM predict that the PS3 will be priced on its US début at US$500 (€411) in 2005. I say it’ll be more like US$300 (€249), and because we always get fleeced here in the UK, call it UK£300 (€450) on its UK début.

The report predicts that PS2 games will be produced through 2008, which when you consider that PS1 games are still being made ten years after the original appeared, is not too much of a stretch of the imagination.

WM feel that the PS2’s backwards compatibility with PS1 titles was a key factor in its success, and with doubts over XBox 2’s compatibility with older titles we might just get to see this replayed and confirmed.

The report also attacks discounting of games, and they certainly have a point: gamers have come to expect prices of titles older than six months or so to drop dramatically, and so just wait until they do. WM’s recommendation to combat this isn’t going to win them any friends: keep supplies scarce at the beginning, and keep the price up.

See, I told you analysts were evil.

The report

European iTunes Launches – UK79p or €0.99

Apple’s much-awaited iTunes store has launched in Europe, and is setting a new price for music.

Offering 700,000 songs for UK79p and €0.99, the price point is considerably less than Napster UK, who last month claimed to us that wholesale prices where the cause behind their UK£1.09 (€1.62) basic price. Most iTunes albums will cost UK£7.99 (€12). However, iTunes UK is rather more than its US equivalent, famous for its US99c price for single tracks.

Also, note that UK79p is actually €1.19 by today’s exchange rate, so UK music buyers are getting fleeced yet again.

iTunes has one of the best set of consumer rights behind any music site, allowing users to play a track on up to five different devices along with unlimited CD burning.

Due to massive interest, the iTunes store is being a little unresponsive at the moment – we’ll be logging in later and taking it for a proper test spin.

AOL chose today to announce that they have formed a partnership with Apple to integrate iTunes into their product. The main advantage for AOL will be single-click registration, with free downloads promotions and iPod competitions.

Apple Launches iTunes

Steve Jobs: The 99c Track Is Staying, iTunes 4.6 Released

Steve Jobs has confirmed Apple’s commitment to a single US$0.99 (€0.82) price point for tracks bought from their iTunes music store. Apple have been vehement in stating their commitment to 99c, and have reiterated it several times over the past month, despite some iTunes album prices climbing.

Labels have been gradually increasing wholesale prices, but Apple have not passed these cost onto their single-buying customers … yet.

At the recent D: All Things Digital conference in San Diego, Jobs stated: “We don’t think the consumer wants to pay more than 99 cents.” He’s not wrong.

Apple have also released version 4.6 of the iTunes application, adding support for AirTunes and AirPort Express, so that users can stream music wirelessly around the home. The new version is also features a number of other “minor enhancements – we’re downloading a copy now and if there are any surprises in it, we’ll let you know.

Download iTunes

NPD Group: US CD Price Cuts Are Accelerating

NPD Group’s MusicWatch PriceLab latest information shows that US price cuts to CDs are accelerating. CDs in Q1 2004 were 4% cheaper than in Q1 2003. By Q3 2003, the prices had only fallen 1%, by Q4 2003 they’d fallen 2.5%.

This means that the average price of a CD in the US has fallen to US$13.29 (€10.90) from US$13.79 (€11.31) in 2003. Titles older than 18 months are cheaper still, averaging at US$12.99 (€10.65).

“There are several reasons for the accelerating decline,” according to Russ Crupnick, president of NPD Music. “First and foremost the recording industry has had to deal with a changing market over the past few years, which was fuelled in part by file-sharing. But the retail landscape has also changed, and consumers are increasingly exposed to everyday low prices or terrific discount offers. Everyone also recognizes the increasing competition for entertainment dollars, as DVDs and video games are growing at double digit rates. These situational factors are causing the industry to reduce rethink pricing.”

NPD Group

Cable and Wireless Buy Bulldog – What’s the Threat to BT?

Cable and Wireless’ recent purchase of Bulldog means that they acquire four years of local loop unbundling experience, 38 ready-equipped exchanges and a number of well-marketed, innovative products. All for the bargain price of UK£18.6 million (€28 million) – though Bulldog’s net assets at the end of 2003 were only UK£1.6 million (€2.4 million). This puts C&W in a position to offer unique services, and not just resell products from BT Wholesale.

Bulldog have long been critical of BT, and have said some fairly dramatic things over the last few months. My own personal favourite quote was from Richard Greco, when talking to The Register in 2001: “Oftel needs to force BT to move. And if BT doesn’t, then Oftel should point the gun – and pull the trigger.” However, he was quite gushing about BT when agreed to carry their SDSL products some months later: “It really is a powerful combination.”

Bulldog’s frustration at BT stemmed from the glacial pace that the communications giant was unbundling the local loop. Bulldog have installed their own equipment into 38 exchanges, a figure that C&W now want to raise to 200. They will doubtless use this position to tempt more ISPs to jump from bitstream services to LLU – as C&W chief Francesco Caio said in a statement: “The acquisition of Bulldog will accelerate our ability to deliver directly connected DSL solutions for our existing and potential customers with an experienced team specialising in LLU services.”

Bear in mind that it’s not just BT that is causing frustration with LLU – across Europe the entire process has been slow and as yet only a small percentage of lines have been unbundled.

BT has already demonstrated that it’s worried about complaints about its LLU conduct and progress by making huge cuts to wholesale prices and promising faster progress. With C&W breathing down its neck even more, expect those exchanges to be unbundled faster than ever before.

About Bulldog

iTunes and Sony Connect Launched This Month; Napster UK High Pricing Explained

Although Apple is yet to make an official statement, many sources believe the European version of their iTunes music store will launch in the middle of June. Although Euro iTunes is expected to be more expensive than its American cousin, the price difference is not expected to be as dramatic as the one demonstrated between US and UK Napster.

Sony has just completed deals with European independent labels, adding another 75,000 tracks to its catalogue. The Connect store uses Sony’s SonicStage software to protect the ATRAC-encoded tracks, and does not serve MP3s. On future developments, Sony US lead Howard Stringer hinted that Connect might feature video content too – which, considering Sony’s huge range of capable hardware, is probably a very smart idea.

We’re grateful to Napster UK for getting back to us on our query regarding the remarkable disparity in pricing between its US, CA and UK stores. The reason? Greedy labels. Adam Howorth, Communications director at Napter UK told us: “it’s simply down to the higher wholesale price we get from the record companies in the UK. If they would reduce their prices, so would we.”

Connect Europe

iTunes

Napster UK