I’m sure you’ve heard about the next-gen gaming consoles and the current battle between the three big guys. If not, basically there is Microsoft with their XBOX 360 console which has been out on the market for a while now and dominating against the older consoles. Then you have the not-yet-released Wii console from Nintendo and the Playstation 3 (PS3) from Sony.

Now console gaming is a massive multi-billion dollar industry and competitive too. The companies manufacturing the consoles generally don’t make much profit from the hardware (and in fact Sony will be losing about US$200 per console), but make-up for it with software licences and other services. So most of the marketing battles are focused on the gaming experience (gameplay, game graphics etc).

But people not only want a great console to run these high-end games, but they also want the price to be cheap:

Wii - US$170 (expected price)
360 - US$299 (current price)
PS3 - US$499 (expected price)

Looking at those prices, what would you buy?

I’ve always been a playstation man having gone from an NES to a Super Nintendo to a PSX and currently have a PS2. But I can tell you now I will probably be buying a 360 and Wii combo which will still workout cheaper than buying a PS3.

Now there’s a bit of a story behind why the PS3 is so expensive and if you follow the tech news you will know that Sony is also trying to launch their “Blu-Ray” portable media (it’s pretty much just a dvd disc that can hold 50GB+ of data). However they have some big competition in this sector too with another large storage portable disc called “HD-DVD”. So what Sony is doing is including a Blu-Ray read/burn drive in every PS3 in the hopes that they can establish Blu-Ray as the standard. Problem is that it’s very new technology and the drives and discs cost a truckload to produce.

Rumours have it that at US$499, Sony is set to lose about $200 per console produced… so they’re putting a lot on the line and its a big risk.

Being such a large risk and all, you’d think Sony would setup a skilled marketing team and carefully map out their pre-launch marketing as most consoles do. *pffft lol*

Sony have had soo many hiccups and bad PR, I would bet that the PS3 will be the worst console launch in gaming history.

They’ve had numerous delays, massive public outrage over the price and all-in-all just constant (almost weekly) bad publicity. Some recent announcements have been that they haven’t started production yet and so the PS3 won’t be released before Christmas, another was that their initial production output will be cut in half, and they just released their first commercial! (too bad it really sux)

Sony’s major flaw is simply that they have OVER-PROMISED and UNDER-DELIVERED. When they should be UNDER-PROMISING and OVER-DELIVERING.

From the start they should have set a later release date, announced a high price, and perhaps even scrapped the Blu-Ray component. That way they could have released “early”, “reduced” the price and when the Blu-Ray technology reduced in cost and matured a little more they could have released an advanced PS3 version with the technology included.

The Wii on the other hand has been doing everything absolutely perfect, and are set to launch before this Christmas. They are actually doing so well that they have Microsoft saying “Buy a 360 and then buy a Wii” and they have Sony saying “Buy a PS3 and then buy a Wii”.

So it will all be very interesting to see how things pan out

If you own Sony stock: SELL SELL SELL like there’s no tomorrow!

Nathan Waters
“Wii60″ - Wii/360 combo?

Last weekend I took some time away from the computer to get stuck into some physical work! … OMG, yes that thing that involves movement and use of muscles other than the keyboard-typing fingers and mouse-moving wrist. (yes currently my entire body is aching)

Actually myself and a few other friends were helping a mates parents strip out their shop as they were closing down their business. They ran a electronics/hi-fi business franchise called “Leading Edge”. Tis a long story but originally they were a “Dick Smith Electronics” franchise and had built up a large amount of goodwill around the town. But DSE treated them badly so they switched over to Leading Edge.

Things were going well until a large shopping centre opened up in the middle of town and as luck would have it, a big, new DSE opened up there too within a mere 20 metres of Leading Edge which was across the street. The shopping centre has managed to soak up the traffic, killing the majority of the rest of the town.

Anyways we spent the weekend unscrewing fittings and knocking things out and carrying them away. It was actually pretty fun!

But what it made me realise again is that I hope I manage to stay away from physical, “brick & mortar” businesses for the majority of my entrepreneurial life (except maybe a service-based business). Some people obviously prefer having a physical business where you can interact with customers and don’t have to sit in front of a computer all day.

But I’ll go through the points of why I don’t like the idea of it:

• 9-5 is hectic enough… but that is just for an employee. When you’re the employer, the business owner running everything, that time changes to a 7-7 schedule and that could include weekends as well!
• Stock. Think of how much capital you need to first get the stock, then think of how you’re going to store it, track it, display it, price it, sell it and worst of all, what if you can’t sell it? There was a lot of stock that remained un-sold after they had a large, almost at-cost sale at Leading Edge.
• Expansion. How many brick & mortar businesses do you see turning over millions of dollars each year? … I know there are a lot, but when you look at how many aren’t, it becomes a little saddening. To expand your business you basically need to franchise out and open up a new shop in a new location, which is a logistical issue and an expensive move. I tend to figure that when you open a shop in a town you are immediately limited in the amount of revenue and profits you can achieve from that shop. There is only a certain amount/population that might buy goods from you in that location and the only instance where people will travel 10, 20km is if they’re after something unique or if prices are cheap enough to travel the distance.
• It’s expensive. When you look at all the overheads of offline businesses such as rent, wages and stock to name a few… it is very pricey to not only startup, but it’s pricey just to keep it running.

You take an online business and these tend not to be issues in a lot of cases. If you’re lucky you can work just a few hours per day when you want to, you can use drop-shipping services or you may not even need stock, expanding doesn’t necessarily require a large amount of money as you basically just need to market to a wider audience using your existing website and startup/running costs are very, very low.

Heck, even when you go bust the offline business bites harder than the online one. A majority of online businesses can be run with little costs, but if you do need to close-up it’s just a matter of taking down the website, sending out a mass notification mailout to your customers and perhaps selling the site/domain. If an offline business goes under, you have un-sold stock to worry about selling, you have customers you need to notify, you have lay-bys you need to fulfil, you have shop fittings and office furniture to remove, rent contracts to get out of etc etc.

So that’s my opinion… I’d love to hear yours, post a comment!

Dugg this post? Why not digg it?

Update: There’s also an interesting discussion on the YGG Forums following on from what I’ve said here.

Nathan Waters
“Hosting & Internet” over “Brick & Mortar”

“Drop Buy Now Official” was the original post title, but then I started rambling about the steps of registering a business

After a couple of enquiry calls, some changing of details online, a trip down to the local Fair Trading Office and $137 later… “Drop Buy” is now an officially registered business name! You can checkout a scan of the business certificate here… apparently an important document which I didn’t realise the first time around (don’t fold it!! lol). And you can checkout my registration details here.

Once I’d worked out whether or not I could just change all my details online, it turned out that I just had to register a new business name and I just went online and changed a few details for my ABN and GST registrations.

Australian business registrations work a little odd…

1) Registering for an ABN (Australian Business Number) is free and done through the Australian Business Registrar (ABR)
2) Registering for GST (Goods & Services Tax) is free and only mandatory for businesses with a turnover of $50k or more, but it’s beneficial to register before that stage as well. You can register for that through the Australian Taxation Office (ATO)
3) And finally to register a business name, you must go through the NSW Office of Fair Trading or the equivalent for your state if you live outside of NSW. This is the only process that can’t be done online (either done by mail, or going to a Fair Trading office) and costs $137 which registers the business name for 3 years.

Confused yet? … and this is only to register as a sole trader (me) or partnership etc.

This time around I actually found the process quick and easy… I guess it helps when you’ve done it before and already have an ABN and registered for GST

I remember when I first started blueyeT systems, which can now sort of be considered Drop Buy beta v0.1, it was a very complicated task and I wasted many months trying to workout what I had to do in terms of legally registering an ABN, business name, GST and all the other unnecessarily complicated taxation stuff.

There wasn’t and still isn’t a simple guide for young people on how to completely get a business started, especially in regards to tax and legal requirements. I still feel a little in the dark on properly accounting for taxation and GST. When I feel confident about the whole thing, I might create some quick guides to help Aussie YEs out.

I think if I had parents who knew about the whole thing it would have been much easier, but nevertheless I haven’t been sued or fined by anyone yet and make sure I keep my records… so I guess that’s a good sign

So…

Drop Buy checklist in a good order of how to startup a business these days:

• [done*] Quick competition and consumer check (target-market surveys, undercover spying on competition weaknesses etc)
• [done ] Domain Name: www.DropBuy.com.au and hosting
• [done*] ABN
• [done ] Business Name: Drop Buy
• [done*] GST
• [done*] Wholesaler/s… although you might want to double-check prices right at the beginning to see if you can compete with competitors. Currently I only have wholesalers for computer and gaming supplies, so I will start searching for others as I expand the Drop Buy catalog.

* Already done/established/known from previous business, blueyeT systems

• [to-do] Business logo and website design/template… To start with the website will simply be a form to submit a quote until I can build-up enough resources to pay for a completely customised ecommerce package. So I think I will just put up a $150-$200 project on the sitepoint forums for a logo, letterhead, website template etc.
• [to-do] Open a business bank account. Although I might actually put this off for a little while until orders start kicking in regularly. For blueyeT systems I just used my personal account since business was pretty irregular and so I figured the benefits (which were not terribly much) weren’t worth the extra $10 per month.
• [to-do] Advertising… Initially I will target Uni students for a few reasons. One being that I know uni students basically want cheaper prices which I can definitely offer. Another being that advertising should be cheap and easy as I can simply print-off a few flyers myself and put them up around the campus and University itself. And finally, I think that uni students know and have contact with a lot more people than most of the other demographics.

So hopefully if they like the price, service and products it is possible that they could tell 50+ people about it. As you know word-of-mouth is the best form of marketing and getting the word out there about your business, in fact it was all that blueyeT systems ran on since I put off advertising due to time restraints with the final years of high school.

Anything I’ve missed, any tips or advice… please let me know.

Nathan Waters
Drop Buy Owner/Manager/CEO/[insert position]

As you may have noticed in the forums and on this blog, I’ve been adding little teaser snippets of this so called “pixel advertising site”. After around 4 months of off-and-on work, a lot of coding and a lot of cursing, I have finally finished it! So without further ado, here it is:

Where?

Oh you want to see it? … www.pixTower.com

PS, if there are any issues with displaying the site, please let me know

What?

pixTower is a novelty project that has potential to be successful if not in producing some nice revenues, then definitely in building a profile for myself in the wider community.

If you haven’t worked it out yet, pixTower is a tall virtual tower made up of smaller apartments. The apartments (pixPartments) have been designed and created by either an individual or business and in the form of isometric pixel art. If you hover your mouse over each pixPartment you can see the details of that particular resident or advertiser. Click on the pixPartment and checkout that advertisers’ website… simple.

How?

How did I come up with the idea?

Essentially it is a mashup between the infamous Million Dollar Homepage and an awesome site I found a few years ago called Mr Wong’s Soup’Partments. Checkout the pixTower About page for more details.

So combine them and you get a tall virtual tower (pixTower) onto which people can purchase an apartment (pixPartment).

Why?

Everyone knows the MDHP success, but many clone sites have failed to see their mistakes in entering an over-saturated niche with an idea that lacks any innovation or uniqueness.

Despite this I have noticed that some clone sites have managed to make upwards of $145,000. (makes you think twice before dissing some kid for releasing a mdhp clone :D)

The thing that I saw these clone sites failing to noticed was why Alex Tew’s MDHP actually was a success.

Traffic.

How’d he get traffic? Well in my opinion it was not because people continued to checkout his site because they wanted to look at the ads and click the links… that may have been their second action when visiting the site, but not the reason in visiting it in the first place.

I believe it was because they wanted to see how many pixels he’d sold… i.e how much money he’d made. That and the curiosity factor achieved through word of mouth. (If someone told you a uni student was planning on making $1million dollars and everyone was talking about it, could you hold yourself back from visiting the site? … Probably not.)

To receive traffic to your website you need something to attract people to it. Sounds obvious doesn’t it, but MDHP clones have and continue to fail to see this.

Now Mr Wong’s tower was begun and “terminated” sometime back in 2002, which is a long time ago when looking at Internet trends in places such as online advertising (Google Adsense was only introduced in 2003!). But that tower managed to house 406 residents which is a great achievement. The site has no ability to click on the apartments, website links are displayed as images, there is no blog, there is no newsletter etc… and yet it reached 406 residents before the project was terminated (reason unknown to me). I’m sure the site also received a nice flow of traffic in its day, simply because if you begin to look at the interesting and plain crazy apartments it becomes addictive!

Fast forward to 2006, pixTower is fresh and exciting, riding on the back of the ripples of a potential tide rise (waves have passed). Add linking, hover and descriptions to each apartment, add a blog which helps with SEO, add a newsletter which is a great marketing tool… package it all up, add a few competitions, hit the marketing/advertising solid and hopefully traffic will flow to checkout the buzz and hopefully get addicted enough to maintain steady traffic and give advertisers no reason to backoff paying the small cost for permanent exposure.

Where to from here?

Now begins the advertising and marketing stage … in some ways the fun part compared to the tedious coding of the last few months.

In writing this I am still yet to send out a press release, and yet requests for apartments are rolling in due to an email out I did to those on Mr Wong’s tower (sadly most emails were invalid due to the age of the site). If you’ve noticed that some of the pixPartments are the same as a few on his tower it is because they specifically gave me permission to use their apartment on pixTower. I will make sure I mention this on the pixTower Blog to avoid any possible rumours from spreading :).

I have written a press release and getting ready to send it out to a bunch of online PR sites and also do a few printed copies and send them to local newspapers.

After that I have a 4 page list of other things to do and places to promote pixTower. If the steps in this prove to workout, I’ll be sure to let you guys in on the “secrets”. As again, subscribe to the blog and I’ll keep you posted.

On a side note, I think I found that post very easy to write. Why? … I just checked my feedburner stats for this blog and in the last two days subscribers have shot up from something like 4 to 16! Wow! … It could just be a sudden influx of readers due to pixTower announcements, but having actual subscribers is a great motivator. Thanks for reading guys!

Nathan Waters
pixPreneur or pixCrazy?

Steve Pavlina is on a roll

I would definitely have to rate his latest post, 10 Tips For College Students, as the best blog post I have read this year.

I wish he had written this before I stumbled into uni as it would have been very helpful.

He goes through a couple of very good time management techniques for getting through uni/college and getting the most out of the experience.

I’ve been thinking again lately that next session/semester I might drop Computer Engineering which I’m finding to be very boring so far… since they’re doing subjects such as Physics, Maths, Electronics and C Programming… all of which I don’t believe I will ever need to use in my entrepreneurial career.

I’m not going to completely drop out of uni just yet, I’ll go back to Commerce where I think I’ll find more of a passion for the subject matter. However it means I either have to catch up or complete a few of the missed subjects during the 3 month summer session when everyone has their break.

So if I do decide to go that direction, these tips for uni time management will be very handy.

Nathan Waters
Time is an issue.