25 March 2011
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Disintermediation and the WiFi Router

But First:  An Imposter Impostor

Two yesterdays ago I sighted a three-pen not-nerd, and headed her picture "An Impostor Sighting."  Just minutes ago I read an item in the Times whose heading contained the word "Imposter."  Can there be two different types?  I ran to the computer in spelling panic with the intention of silently correcting my typo.  To be fair (to me), I didn't consider this an error on the level of the WSJ headline that mentioned the "Pengaton."  Even so, I don't like to misspell* words, especially in headings.  I whew'ed a whew of relief when the spell checker confirmed that both spellings are considered correct, and would have left it there, with no comment and no needed correction, until I realized that either spelling could be an imposter (or ...or) for the other.  I'm a sucker for this sort of recursion, even more so than I am for the wily zeugma.

Gimme Eat - Two Systems

If you haven't heard of Groupon until recently or even until just this instant, it's OK.  They are a new(ish) internet company that works with merchants to present bargain offers.  Their business model involves signing up local merchants to offer discounts to (hopefully new) customers.  For example, you can buy $50 worth of food from a restaurant by paying Groupon $25 for a certificate.  Groupon and the restaurant share the $25, perhaps 50/50.  This is a great deal for Groupon, who gets $12.50 for sending you a printable web page which costs them almost nothing, but perhaps not so good for the restaurant who forgoes 3/4 of the $50.  The lost revenue pays for what the restaurant hopes is a good shot at getting a new regular customer.  Sometimes it works, sometimes not, but Groupon scores nonetheless, to the extent that Google offered to buy the company recently for $6 billion!  Groupon and many other companies are relentlessly trying to "monetize" almost every transaction just as the credit card companies have been doing for decades.  This is a mixed curse, of course, since things, stuff, and services cost what they cost, and if there's an additional layer raking off the bucks between the buyer and the seller, the buyer will end up paying more.  The benefits of having the "middle man" range from great (e.g., product support, higher volume) to nonexistent.

Maybe I'm peckish and have a Groupon certificate, and your restaurant is the target of my need to feed.  I will shortly have had a $50 meal** for the price to your establishment of a grilled cheese sandwich.  Of course, if I didn't have the certificate, I would have been unlikely to pick your restaurant out of the welter of food purveyors.  But why do you have to sacrifice any hope of profitability on that transaction to some giant web enterprise?  Maybe you don't!

"Disintermediation" is a $.40 word (floccinaucinihilipilification is the $1.00 standard) meaning, in effect, removing the middle man.  You, Mr. Restaurant Owner, are using Groupon as a middleman to entice customers to sample your provender.  You are paying dearly for the privilege.  Do you need this middleman?  Of course not!  Whenever you see more than one or two empty tables, you can go into the street and accost passersby with whatever blandishment seems suitable.  A free dessert certificate?  A 10% off-the-check coupon?  An entree upgrade, whatever that might be?  You probably don't do that because you're very busy and you may even have "dignity."  But guess what:  Your WiFi router has no dignity and plenty of bandwidth.  Instead of using an aggregator or middleman, you broadcast a series of graduated offers, suitable for an empty table or an empty restaurant.  This is what the airlines do with their "yield management" and there's nothing stopping a business owner with "wasting assets" from doing the same, entirely on his own. 

How many people walk by your establishment carrying smart phones?  Right now, quite a few.  In a year or two, almost everyone.  What does it take to broadcast directly to these phones?  An "app" in the phone and a small program in your computer.  Do you need to make a deal with some company that will broadcast your deal to tens or hundreds of thousands of people?  Not if your candidate customer is a person nearby feeling the pangs of hunger.  On your end of the system, you have a screen on your computer where you select the deal of the moment; the customer is running an app on his smart phone that allows him to select, among "I need new shoes," "I need to be entertained," "I am craving a Linzer Torte," the simple phrase "Gimme Eat."  If he comes within WiFi range of your establishment, in he may go for Eat after receiving your offer.  If the house is full, just turn off the offer transmission.

Most importantly, there need be no cost for the ability to do this.  If you already have a computer, you can attach a WiFi router to it.  You don't even need an internet connection!  Someone will write a smart phone app and the corresponding merchant app and sell them for 99 cents.  (If someone tries to charge more, just wait.  There are millions of $.99s waiting for someone who does it right.  That's incentive enough.)

I've used the example of "Groupon" and "restaurant" here to keep it simple.  But if I get zealous I'll try to expand this concept.  I'm not thrilled that so many companies try to get a share of business with which they have no connection.  I'm even less happy that I didn't think of it first.

Thank You!

I bought a book on eBay a few days ago and just received my feedback:

Thank you for being a positive transaction partner!

I've never been thanked for exactly that before, and I shall have to work on a response for when I receive my book.

*  I once misspelled "Gaborone" (the capital of Botswana) in a post, and a gentlemen kindly emailed me to tell me that I had "mispelled" it.  I thanked him and responded that he had misspelled "misspelled."

**  Not really.  I reserve $50 meals for dining with others.  Most likely I will order a grilled cheese sandwich and the restaurant will get the full amount. 





Rather a fanciful depiction of an Ampex tape cassette.  ("Tape" is what we used to record music in fossil time.  Over the years the tape has gone bad and the pressure pads have fallen off.  I've developed a minor and increasingly unused skill in repairing these things.)

Ampex tape cassette t-shirt
Richard Factor

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