Category Archives: Business

Why the Net Isn’t Neutral

server rackI understand, you want things to be fair. You’re all about fair play and equality. You’re even willing to wear a silly hat and carry a sign if necessary in the name of fairness. I get it and respect that.

When I read many posts making claims about net neutrality, I realize the masses can be so readily manipulated. It’s one of the reasons I’m glad I’ve learned to be more skeptical and willing to dig for information. It’s because so few people are willing and able to dig in for themselves, preferring to accept the most frequent regurgitations as fact.

No matter how many times I’ve neutralized the arguments about net neutrality, even some people who I regard as highly intelligent, accept the following as fact.

Without net neutrality we will lose these benefits:
(these claims are false but many believe it to be true)

  • education on-line
  • employment opportunities
  • social media access
  • on-line shopping
  • ticket buying
  • cat videos
  • our favorite porn
  • explosive or chemical devices (see this link)

Before 2015, there were no legal protections requiring net neutrality. Before 2015 Internet providers could charge different prices for different speeds. You wanted faster Internet, you paid a higher price. After 2015, when “net neutrality” laws were passed, Internet service providers are able to charge tier level prices. Faster Internet = higher pricing. Notice any difference before 2015 and after? There isn’t any.

Let me explain it another way. The whole idea behind net neutrality, is to keep data flowing freely. You want to be able to watch those on demand cat videos and Internet porn, or your favorite net-fix video. You believe it’s your right, but it really bothers you that a company has the audacity to charge you more if you use more data. How dare they!

If the objectives of the law were to insure we receive services on an equal basis, then why is it other “utilities” charge more for their services? Water companies charge more for greater consumption. Electric companies charge more for additional capacity & usage. What are we asking for data services that differs from other utilities?

If Internet service slows or is completely off-line, I call the provider. The problem is identified and the issue is resolved. Municipalities (local government), created a localized monopoly when they chose a single provider for a specified geographic area. This eliminated a market aspect of control and correction through competition. Rates and services improve with competition. Politicians with government regulations created the problems. They later identify & amplify the problems they started, and promote their willingness to fix if only we would elect them.

Dianne Feinstein speaking

To put it succinctly, if the government were to be put in charge of a desert, there would be a shortage of sand in a few years.


 

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Economics 101 – The Mess We’re In

Politicians have modified capitalism to suit their largest contributing supporters, thereby enhancing their future elections. This is often referred to as Crony Capitalism 1.

Here are some basics which people are either ill-informed, or refuse to understand because their beliefs override facts.

  • Poor people don’t employ other poor people.
  • People that possess money, or obtain credit, leverage their ideas and talent at great risk, often employ other people.
  • This can enhance the wealth of those business leaders who combine & leverage the labor and skills of others in creative ways.
  • Creditors and investors provide capital to the business, and benefit by the financial gain of the company.
  • Those whose primary object is to decide what’s fair in compensation, for the labor and skill of employees, do so by taking more from those who create and sustain that employment.
  • Eventually, the balance is tilted under government control, such that they and their closest friends & allies, receive the greatest benefits through confiscating the profits from the investors and the company.
  • They (politicians) redistribute profits to appease the employees, and describe that as fair. Creditors & investors withdraw their support.
  • Those who have placed themselves at the greatest risk and have used their imagination to begin or enhance the business, now find their financial rewards diminished.
  • These dwindling profits, and the lack of investors, push the owners into foreclosure and bankruptcy and they join the throng of those who have already staked out their claim for government assistance.
  • In the end, everyone’s standard of living has diminished except the politicians and their cronies.
  • The poor become more poor because business has been destroyed by those who gained their office through a promise of fairness.
  • Larger business, through the support of their friends in government, buy the distressed assets at reduced prices and become more wealthy.

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  1. Crony Capitalism An economy that is nominally free-market, but allows for preferential regulation and other favorable government intervention based on personal relationships. In such a system, the false appearance of “pure” capitalism is publicly maintained to preserve the exclusive influence of well-connected individuals.

Another Motorcycle Brand is History

It came as a somewhat unexpected (probably only to me – more informed people knew it was coming), that Polaris manufacturing, makers of Victory & Indian Motorcycles, decided to drop the Victory line and stick only with Indian Motorcycles.

victory-models-end

End of the Line for Victory Motorcycles


Victory Motorcycle Announcement
1/9/2017 12:00:00 AM
Polaris Industries Inc. (NYSE: PII) will immediately begin winding down its Victory Motorcycles brand and related operations. Polaris will assist dealers in liquidating existing inventories while continuing to supply parts for a period of 10 years, along with providing service and warranty coverage to Victory dealers and owners. Today’s announcement does not affect any other Polaris business units.


The history of Victory Motorcycles® doesn’t stretch back over the past hundred years. We are young, full of drive, with our eyes on the horizon. That passion has raged since 1998, when a small group of riders, designers, and gear heads came together in Minnesota, and decided to engineer power and performance back into American V-Twins. Our first bike roared to life on July 4th, 1998. This was more than a patriotic gesture. It was a flag in the ground that marked the rebirth of the American V-Twin, and we’ve been claiming more roads ever since. From numerous awards to leading innovations, we have given new life to American muscle with industry changing cruisers, baggers, and touring bikes.

Well that’s what they said. Now, here’s my two cents.

victory_motorcycle_promo_pix_b

Victory Motorcycles 2015

Eighteen years or so, is a long period of time if you’re talking about digital tech. When it comes to any kind of transportation, motorcycle, cars or trucks, it’s nothing. It’s a blink of an eye, and no one in a few years will likely remember much about the company unless they turned out some very innovative products. I’m not so sure I can recall anything about Victory Motorcycles that was all that remarkable. Believe me, I’m not taking anything away from them. They probably built a few models that will stand the test of time, and I’m sure if I rode one, I would’ve enjoyed it. Here’s the thing, I didn’t, because I saw nothing that really intrigued me over what is already available in the market.

I fully appreciate the problem they had, before they even started. The cost of doing business in this highly competitive and regulated industry is daunting. Before you can even begin to manufacture, there are thousands of federal and state regulations you must meet and that’s not even counting the labor and distribution regs.

The market demand for motorcycles in the U.S. is not anywhere close to the amount of automobiles sold. According to Bureau of Transportation Statistics, “Motorcycle registrations in the United States have grown each of the past 10 years, from 3,826,373 in 1997 to 6,678,958 in 2006—a 75 percent increase overall.” Sales of new bikes hasn’t achieved huge increases. There are many people, like myself that simply buy a used bike from someone wanting to trade or exiting the market.

Here’s a sampling from Revzilla of motorcycle sales.

motorcycle-sales-ending-in-2014-stats

The problems they faced by entering a market with an increasingly older rider demographic, with a product facing established, successful competitors, Harley Davidson, Honda, Yamaha, Triumph, Suzuki, etc. were huge. They needed something where a segment wasn’t being served. To say, we’re the alternative to Harley-Davidson because we are an American manufacturer that also builds large cruiser & tourer motorcycles, just wasn’t enough.

As a matter of practicality, when you look at two of the biggest motorcycle manufacturers, Honda & Harley, you have to ask yourself, what makes them so successful? I might not be an expert in this area, but I can sure take a good guess. Harley-Davidson in 1980, like the 1950’s and 60’s British bikes was taking a dive. In the late 1970’s and throughout most of the 1980’s, BSA, Triumph & Norton were gone. By the 1980s the Harley-Davidson Motor Company had come within red-ink inches of the edge of the cliff which many other manufacturers had plummeted over. In 1981, they managed to combine a group of investors and through an LBO bought the legendary motorcycle company. Recovery came rather quickly with these committed people at the helm, and through their persuading President Reagan to impose tariffs on larger displacement imports.

Harley-Davidson knew they had a brand that could engender loyalty. In a way they leveraged the 1% biker image as a marketing ploy to those who had large enough disposable income that wanted to be weekend “hell-raisers”. The doctors, dentists, pilots, and many other successful business men wanted to show they were still “rebels without a cause.” They sold on “sex appeal”. Even the historical Triumph Motorcycle brand was resurrected by a successful British real estate mogul.

Meanwhile Honda, the always market savvy and almost always reliable manufacturer of small bikes, continued their onslaught from the 1970’s with ever larger and more sophisticated bikes, but never forgot the younger more economy minded motorcyclist. They understood the ageing demographic too, by developing and continually upgrading the Honda Goldwing. The closest thing to a Bentley or Cadillac on two wheels, but with handling and power of some sport bikes. Honda also found the off-road segment was a market worthy of pursuing. The biggest market for Honda is Asia, with small displacement & Moped size bikes.

Polaris came into the market with the Victory and later, doubled down with the purchase of the Indian brand of motorcycles. Indian was the historical rival of Harley-Davidson and some say, the most beautiful of the earlier 30’s art-deco inspired styling. It didn’t really pay much attention to what was currently trending as it slowly grew from the bigger rivals.

Harley-Davidson has social and consumer branding down to a science. They sell a lot of other merchandise and they get free advertising. Almost everywhere you look you will see a clothing item or sticker with the name of the company. I don’t know if they aren’t a more recognizable brand than Coca-Cola.

Honda sells machines to every conceivable market segment with a reputation of reliability. I’ve been a Honda motorcycle owner and fan of the product since the late 1990’s. I’ve never had a breakdown. If you do the normal maintenance, (which isn’t much), you can expect that when you turn on the key, you’re in for a pleasant experience of getting to your destination.

So who or what is Victory, other than a name? I saw a couple of their models that I liked, but I know the older riders tend to like the Harley. It’s also gotten very reliable and they’ve come out with some new models to address the younger and less willing to spend mega-dollars on two wheels, consumer. The big luxury tourers offered by Victory seemed to use a merger of the Jetsons meet the Croats idea of design.

victory-motorcycle-2017-lineup

Victory went after the same market segment as Harley-Davidson. That’s primarily, the over 50 male crowd. They didn’t offer models that would appeal to a younger segment, like sport bikes or financially frugal riders. For the most part, they ignored marketing to women. How then could they see a path to success? Build a better mouse trap? As I said, Honda is incredibly reliable and Harley isn’t too far behind. Increase displacement? Harley-Davidson has been doing that. In recent years, Harley-Davidson has steadily increased displacement since 1999 – 88 cu in (1,450 cc), 96 cu in (1,584 cc), 103 cu in (1,690 cc), 110 cu. in. (1,801 cc). Honda Motorcycles did produce a larger V-Twin (1800cc) from 2001 thru 2008 in Marysville Ohio. They have backed off the larger displacement bikes, concentrating on a different market segment.

Sales statistics for 2105 (U.S. only)
——————————–
Harley-Davidson  – 1
Honda Motorcycle Group – 2
Victory was 10th in the list. Still, they reported this rosy forecast in 2016

harley-davidson_motorcycle_sales_stats

Where does Polaris Industries fit into the motorcycle industry going forward? They claim they will focus more on their Indian brand. This is supposedly a stronger brand for them. The high-end Victory Motorcycles were in the mid $20K and Indian is right about there as well.

Motorcycle Annual Sales Numbers for 2015

Manufacturer North America sales Worldwide sales
Honda Motors 286,000 10.73 million
Harley-Davidson 189,082* 264,627
Yamaha 89,000 5.22 million
Kawasaki 51,000 524,000**
Suzuki 35,000 est. 1.11 million (est.)
BMW n/a 136,963
Ducati 12,132 54,800

Personally, I think they’re done and will entirely leave the two-wheel market in a few years. I don’t think you have to be a marketing guru to realize the almost insurmountable position they’re in. Another air/oil cooled V-twin motorcycle, no matter how old the original brand is, or how beautiful the bike looks isn’t likely to spur an increasing demand or expanded market share. Triumph Motorcycles offers that rich tradition at generally a lower cost of entry.

indian_motorcycles_lineup_2017

Photo courtesy – American Iron

Younger people are more likely to purchase a car which meets their sport and-or fuel economy requirements in transportation. Polaris has many other recreation oriented products which provide them revenue. I think this announcement has damaged their credibility.