Monthly Archives: December 2018

The Era of Free Refills is over

no free refills

December 17, 2018

I have just come back from a magical weekend in Orlando. There is something extra special about paying a visit to a theme park at this time of the year. It must be all the Holiday decorations, incredible light shows, parades and fireworks.

While the light shows and Holiday decorations are a great addition to an already satisfying experience, they did not provide the biggest surprise for my friends and me. Instead the most shocking thing we found is how these parks have found yet another way to increase profits: non-refillable cups.

The regular “combo” at a restaurant generally includes an entrée, a side, and a traditional paper cup for unlimited, refillable beverages. While this is still true for most restaurants, this feature is no longer available within Universal Studios and Disney theme parks. The regular paper cup you purchase now comes equipped with a one-of-a-kind RFID microchip on the base that is read the minute you place your cup in the beverage machine. The machines are configured in a way that enables the chip to be scanned once the cup is sitting on the tray. A beverage will be served following the first scan but after that you have exhausted the fountain drink resources included in your combo, forcing the purchase of a second drink and another cup.

These interactive theme parks have really got it all figured out. Whether it is Disney or Universal Studios, the parks offer a variety of “options” that can include meals and beverages, and by doing so increase the price of entry tickets. A “collectible mug” is also available for purchase at all restaurants. This mug does allow for refills on the day it is acquired, using the same chip technology than paper cups. The microchips in these mugs can also be configured to allow a for a certain, limited number of refills depending on the “meal plan” the individual has chosen.

While the addition of the RFID technology will increase the cost of a simple paper cup, the benefits obtained are highly rewarding. At the end of September 2018, Disney reported that $5.07 billion of the total revenue came from Parks and Resorts – an 9% segment increase over the previous year. Not too far behind, Universal Studios theme parks, now owned by Comcast Corporation, reported a $2.6 billion in revenue as of the end of June 2018 – an 8.6% increase from last year.

While it is highly unlikely that all the increased revenue comes from these high-tech paper cups, I am certain that they are a contributing factor. Although people may now have to spend more money on fountain drinks at the parks, I am happy to announce that water does remain free of charge. If you are planning a trip to any of the Orlando theme parks, make sure you bring your own refillable water bottle! I sure did.

Nirvanna Silva

1217

iPhone Sticker Shock

exploding-head

December 10, 2018

This past week a friend and I agreed we should go see a movie, but neither of us knew what was in theaters. We decided to look at our options on his iPhone. When he pulled out his phone, I noticed that the entire screen was cracked to the point that you could hardly read what was on the screen. I asked why he had not repaired or replaced it yet, and he explained that he had lost his previous iPhone, and just recently bought the one with the now smashed screen. He was not willing to dip into his pocket again so soon after spending over $500 on a phone that only lasted a month before he dropped it.

Unfortunately, I can relate to his predicament. I found myself in a similar situation when the home button on my iPhone stopped working. I resorted to the “assistive touch” feature for a year before I purchased a replacement.

IPhones are now a big-ticket item, and with each new model having a higher price. The current price of iPhones with the standard amount of storage is $449 for an iPhone 7, $569 for an iPhone 8, and $749 for the most recently released iPhone XR. At the high end are the XS models with more storage and larger screens, and a cost of $1,150-$1,450!

In the early days of the iPhone, each new version offered dramatic increases in speed, storage, and camera quality that justified an increase in the price. However, since the iPhone 6, newly released models have not offered much more the previous ones. Without the innovations that consumers had come to expect, there has been less desire to spend so much money on an item that is frequently lost or broken. These sentiments have led to decreased sales. It is no coincidence that Apple has recently decided to stop providing unit sales data; a move which has been widely criticized and calls into question the company’s own confidence in its ability to meet target quarterly sales volume at current prices.

Apple’s decision to cut the price of models 7 and 8 by 100 dollars is further evidence of the downward pressure on prices. An even more striking indicator of the drop-off in sales is seen in information provided by some of Apple’s largest suppliers. For example, Largan Precision, the maker of the iPhone camera lens, saw its November revenues down 29% from last year. Foxconn, the company who assembles iPhones has announced a 2019 plan to cut expenses and lay off 10% of non-technical staff in anticipation of “a very difficult and competitive year”.

I do not doubt the ability of Apple to read and react to the market. I expect that they will soon provide a more affordable phone which still generates a healthy profit margin. But for now, the fact remains that consumers will be reluctant to pay an increased price for a phone that does not offer a commensurate benefit over the previous model.

Corey Erdoes

1210