Coinstar’s new company name, Outerwall, makes me think of other walls

In December 2011, I predicted that Coinstar would change its name to Redbox to reflect the fact that the majority of its sales come from the DVD rental kiosk business. I ended up being half right.
Coinstar this week did announce a name change. But it decided on Outerwall. It’s an odd name that makes me think of other walls in pop culture, not a company involved in automated retail.
I understand why they chose Outerwall. It connotes what it used to call its “fourth wall” strategy. Coinstar puts its machines in the underutilized front of stores. Traditionally retailers sold things everywhere but the very front of the store. But Coinstar’s coin-counting machines, DVD kiosks and premium coffee vending machines have helped change that.
Still, when I hear Outerwall, other walls come to mind. Here are a few.

Wonderwall

“Wonderwall” (1995) is the classic song by English rock band Oasis.

Sugar Walls

“Sugar Walls” (1985) is a single by pop singer Sheena Easton. The song, composed by Prince, is presumed to refer to the “walls” of the vagina and was considered one of the “Filthy Fifteen” by a parents group at the time.

Pink Floyd’s The Wall

“The Wall” (1979) is the classic double-album by English progressive rock group Pink Floyd.

The Wall from 'Game of Thrones'

In the fantasy book series “A Song of Fire and Ice,” and the HBO TV series “Game of Thrones” based on it, the Wall is a colossal fortification that stretches for 300 miles along the northern border of the Seven Kingdoms. It is over 700 feet tall and made of solid ice. It was built to defend the realm from the White Walkers who live beyond it.

The Wall from ‘Almost Human’

The Fox sci-fi cop show “Almost Human” was set in 2048 in a city divided by a giant wall. The Wall separates the good part of the city from a lawless zone populated by terrorists. (Note: This entry added on April 30, 2014.)

Photos: The Wall from HBO’s “Game of Thrones”; covers of “Wonderwall,” “Sugar Walls” and Pink Floyd’s “The Wall”; another photo of the “Game of Thrones” wall; and the Wall from “Almost Human.”

Time is running out for the U.S. penny

Americans are finally realizing that it no longer makes sense for the U.S. to make pennies.
The cost to manufacture a penny is double its monetary worth. Common sense dictates that the U.S. should discontinue the penny. But sentimentalists are clinging to the idea of the penny and could prolong its life. But they’re delaying the inevitable.
During a Google+ Hangout interview on Feb. 14, the most popular question posed to President Barack Obama was why the U.S. has not stopped making pennies, according to Townhall.com.
“I don’t know,” he said. “This is not going to be a huge savings for government, but any time we’re spending money on something people aren’t going to use, it’s not necessary.” Obama said. But Americans might be too attached to pennies, he said.
Cutting the penny out of U.S. currency would save the government $100 million over a decade. The cost to mint a penny is 2 cents, as of 2012.
The public policy website PolicyMic has a good list of pros and cons for eliminating the penny. The arguments for getting rid of the one-cent coin greatly outweigh the arguments in favor of keeping it.
In short, pennies are a waste of resources, a drag on productivity and a hazard to children and pets if swallowed.
The only entities that benefit from the existence of pennies are metal producers and Coinstar, which makes a business of redeeming pennies and other coins.
Some businesses already have stopped taking pennies or opted to round bills to the nearest nickel. They include some outlets of Chipotle Mexican Grill (see New York Times and NJ.com articles) and Dunkin’ Donuts (see article by Minyanville).
U.S. businesses and governments still will account for cents, only the penny would go away. You’ll still see odd-number cents show up on your statements and for electronic payments and those cents can add up. But with financial transactions going increasingly to electronic payment options, the penny is becoming irrelevant.

Related reading: Wikipedia entry on the U.S. penny.

Photo: Pennies from Wikimedia Commons.

11 bold tech and business predictions for 2012

Year-ahead predictions are a dime a dozen.
Put more bluntly by some foul-mouthed philosopher: Opinions are like assholes – everyone’s got one and everyone thinks theirs doesn’t stink.
I’ve reviewed a lot of 2012 predictions by experts in their fields and have compiled some of the most interesting ones.
Here are 11 notable predictions in technology and business that I’ve seen for the coming year.

1. Microsoft will buy Netflix and/or LinkedIn

Kudos to the analysts at market research firm IDC for sticking their necks out with their 2012 predictions. They predicted that Microsoft would buy Netflix to buck up its online content offerings and LinkedIn to add social networking capabilities.
IDC analyst Frank Gens admits they’re “audacious” calls.
“You can’t do layups all day,” he told me. “You have to take a half-court shot now and again.”

2. Microsoft will fire CEO Steve Ballmer

IBD tech business writer Brian Deagon is convinced that 2012 will be the year that Microsoft will give the boot to long-time CEO Steve Ballmer. This prediction has been floated in previous years, but Deagon is practically alone this year. (Warner Crocker at Gotta Be Mobile also predicts that Ballmer will step down next year.)
Deagon thinks Ballmer will be shown the door in 2012, despite the anticipated launch of Windows 8 later in the year, which will give the company a shot at penetrating the tablet market and reinvigorating PCs. Deagon thinks the Microsoft board will finally tire of Microsoft’s lagging stock price and missed opportunities.

3. Apple shares will plummet 50% from 2011 highs

Europe’s Saxo Bank predicts that Apple shares will tumble to $213.35 at some point in 2012, half of its 2011 high. The bank predicts that Apple will lose ground to competitors in smartphones and tablets in 2012 and see its profit margins cut.

4. Apple will buy Twitter

Apple will swoop in and buy Twitter as the microblogging service sees usage wane from competition from Facebook and Google+, ReadWriteWeb founder and editor-in-chief Richard MacManus predicts.

5. Apple will declare a dividend

The Apple board will decide to share some of its $26 billion cash hoard with investors in the form of a dividend, predicts Marc Lichtenfeld, senior analyst at Investment U.

6. Zynga will lose half its market cap

Social gaming company Zynga will see its market capitalization of over $6 billion cut in half in 2012, predicts Bernard Moon, co-founder and CEO of Vidquik, writing at VentureBeat.com.
Moon thinks Zynga will start to see its leadership position in the space diminish next year.

7. RIM will exit the hardware business

Research In Motion will ditch its BlackBerry smartphone hardware business and focus on software, says Alan Shimel, co-founder and managing partner of the CISO Group. RIM will focus on software for managing mobile devices for the enterprise, he says.

8. FTC will take Google to court

The Federal Trade Commission is likely to take Google to court next year on antitrust charges, according to Clint Boulton, senior editor for eWeek and Google Watch.
Boulton also predicts that Google will shutter its Chrome OS and Google TV products as CEO Larry Page continues to clean house of dead-end products and focus on core software.

9. Facebook will expand into e-commerce and business networks

Colin Sebastian, an analyst with Baird Research, thinks social networking leader Facebook will make a big push into e-commerce next year. He calls the online sales trend F-commerce.
IDC thinks Facebook will be getting more “business-oriented” in 2012, partnering with enterprise tech giants like Microsoft, IBM, Oracle and SAP to add social networking to their offerings.

10. Twitter for your toaster

IDC predicts that 2012 will see the arrival of microblogging by things, so people can follow the status of a product or service.
“Think Twitter for your toaster,” Gens said.
Machine-to-machine communications will allow people to follow a Twitter feed from an appliance in their home, the arrival time of a bus or the available parking spaces in an area.

11. Coinstar will change its name to Redbox

Coinstar will change its name to Redbox in 2012. Redbox is the company’s largest business today and it’s being used to brand new ventures like Seattle’s Best Coffee kiosks. This is my only personal prediction for the year.

Photos: Netflix on a laptop computer (top); and a Redbox-powered Seattle’s Best Coffee kiosk at the Harris Teeter grocery store in Reston, Va., in December 2011.

Copper Counter: Things Left Behind On A Coinstar Machine

I’m fascinated by bloggers who obsessively cover one niche subject.
U.K. blogger James Watson writes about things left behind on a Coinstar change counting machine near his home. His blog is called Copper Counter.
“It’s almost a modern form of archeology,” Watson told BBC Radio 4’s Money Box. “You’re looking at people’s rubbish. You are picking up these coins and washers, tablets and ringpulls, and to me it’s just fascinating. I want to know more about the people behind them. I want to know their story.”
At his local Sainsbury’s supermarket, he regularly checks the Coinstar machine and documents the stuff he finds left behind. Watson finds lots of discarded foreign coins and assorted junk that people had tossed in their change jars.
Watson frequently links to his Flickr photo sharing site. In his set titled “Coinstar Finds,” he included 757 photos of leftover coins and discarded bits and pieces. Stuff left behind included coins from at least 38 countries (such as the U.S., France, Ireland, Spain, Czech Republic, Brazil, Thailand, Kenya, Nigeria and Japan), plus safety pins, hairclips, paper clips, screws, washers, pens, batteries and golf tees.
Watson says he’s found 31.34 Euros in coins ($45.07) so far.
Watson hasn’t updated his blog since Nov. 9, 2009. So he might be taking a break or perhaps he’s ended his Coinstar experiment.
I hope he returns.

Photo: Screen shot of James Watson’s “Coinstar Finds.”

Editor’s note: This is the latest in a series on Tech-media-tainment’s favorite Web sites.

Redbox: The early years

Redbox, operator of those popular red DVD rental machines, was almost called Tik Tok DVD Shop.
Gregg Kaplan, one of the founders of Redbox, shared that tidbit and others about the early days of the company in a speech Nov. 10 at the KioskCom Self Service Expo in New York City.
I had the chance to interview Kaplan, now president and chief operating officer of Coinstar, after his speech. Coinstar purchased Redbox in February and Kaplan joined the parent company. We discussed movie studio issues with Redbox and Coinstar’s future in automated retail. Read the story at Investors.com.
Redbox officially launched in 2004. But during two years of beta testing, it experimented with every aspect of the business, including its name. It tried Tik-Tok EZ Shop and Tik Tok DVD Shop before settling on Redbox.
“In the first two years, we went through probably about 50 different business models,” Kaplan said. The company experimented with pricing, selection, locations and the user experience for automated DVD rentals.
“We tested 99 cents a day, $1.50 a day, $1.98 for two days, $2.97 for three days, and by the way, even today we’re testing different price points,” Kaplan said. Today it rents movies for $1 a day.
The selection of DVDs in its machines ranged from 28 titles to 300 in the early years. Redbox eventually settled on 200 titles per machine.
In addition to grocery stores and McDonald’s restaurants, Redbox tried placing machines in office buildings, hospitals, apartment buildings and busy street corners. Since then, it’s tested machines in airports and casinos.
It didn’t have many machines in the early days. It ended 2002 with 12 kiosks and 2003 with 35 kiosks. Today it has more than 21,000 kiosks nationwide.
Kaplan, who was chief executive of Redbox, pushed to make the user interface on the machines as simple as possible.
Early designs for the touch-screen interface included flashy graphics (namely a rampaging dinosaur), but those were spiked in favor of big buttons.
Kaplan recounted the development process:

“When we first designed the GUI (graphical user interface) for Redbox, we had a very creative graphic designer come in. We described what we wanted; he went away for three weeks and came back (and showed us what he came up with).
There was a red dinosaur – a T-rex – charging towards you as the user, a la ‘Jurassic Park.’ And there at the bottom were two little buttons that said “Rent here” and “Return here.” And I looked at him and said, ‘What is this? What’s with the dinosaur?’
And he said, ‘Well, you know, this is a movie concept like ‘Jurassic Park’ and I thought it would be exciting and it would be cool’ … and he said ‘Isn’t that great?’
And I said, ‘Well, we’re trying to convert users here. We’ve trying to get people comfortable with a kiosk. How about we make those buttons a little bit bigger?’ And he said, ‘Alright, I’ll come back.’
So another two weeks go by (and he shows us what he’s done) and the same damn dinosaur is still charging on the screen. The buttons have gotten slightly larger … By the way, we’re running up against deadlines to get these machines out into the field … So I turned to him and said, ‘Alright, you’ve got to get rid of the bleepin’ dinosaur. This has to be so easy that my grandmother can use this. And first of all, my grandmother is going to be scared by the scary dinosaur. And my grandmother can’t see all that well and if you have buttons this small it’s not going to happen. I want big buttons and all it should say is “Rent here” and “Return here.”’ And that’s essentially how we started.”

Since then, Redbox has added another button for “Online reservation pickup.” But the main screen is still very simple.
“If the GUI and user experience feels like an airline cockpit, it’s probably not going to work. It’s hard enough to convince a consumer to use a machine to begin with,” Kaplan said.
Redbox is now testing the rental of high-definition Blu-ray Discs and video games.

Redbox is considering using its self-service kiosks to rent video games

With its self-service video rental kiosks, Redbox is putting the hurt on traditional movie rental stores like Blockbuster.
Redbox, a unit of Coinstar, rents DVD movies for $1 per night from its automated machines in grocery stores, drug stores and fast-food restaurants. It operates about 13,000 red kiosks nationwide in Walgreens, Wal-Mart and McDonald’s outlets and plans to have over 20,000 deployed by year’s end. (I profiled Redbox in a story published April 8 in Investor’s Business Daily.)
Meanwhile, GameFly, which rents video game discs by mail, is experimenting with self-service game rental kiosks. Privately held GameFly is the online video game rental leader. It provides video games on a subscription basis, much like Netflix does for DVDs.
Redbox is watching the video game market closely. I asked Coinstar President, and former Redbox CEO, Gregg Kaplan about the GameFly test and Redbox’s plans for video games in a March 18 interview.
“Video games is an obvious place for us to look,” he said. “I can’t really comment on plans for the future specific to video games because we’re currently focused just on DVDs. But it seems like a pretty obvious place for us to consider. You could bet that it’s certainly something that we’re looking at.”

Pure Digital, Redbox skip the IPO path

With the market for initial public offerings on hold during the current recession, two consumer technology companies that had planned to go public opted to be acquired instead.
Pure Digital Technologies, maker of the popular Flip pocket camcorders, and Redbox, operator of automated DVD rental kiosks, would have been fun to watch as standalone public companies.
But Pure Digital and Redbox needed to find a different exit strategy to satisfy their investors.
Cisco Systems on March 19 announced its intent to acquire privately held Pure Digital of San Francisco for about $590 million in stock.
Pure Digital has sold more than 2 million Flip Video camcorders, easy-to-use devices for capturing videos and sharing them on YouTube, MySpace and other popular Web sites.
Coinstar, operator of those green coin-counting machines in grocery stores, in February bought the remaining portion of Redbox that it didn’t already own.
It purchased the 44.4% stake in Redbox held by McDonald’s as well as shares held by other minority investors. Redbox is based in Oakbrook Terrace, Ill.