Saturday, May 30, 2009

A Site for Statrats

The Census Bureau is an external provider of secondary data. Their hefty Web site is a handy source of demographic data from the largest producer of statistics; it's high quality too. According to McDaniel and Gates (2008, p 72), secondary data is existing data that may have relevance to your research. They go on to say that “sources of secondary data include innumerable government agencies,” including, of course, the venerable Bureau of the Census.

A B2B Report: The Census Bureau ICT
The Census Bureau has a survey report on its Web site known as the Information and Communication Technology Survey (ICT). Its purpose is to make “available data on e-business infrastructure investment by nonfarm businesses.” It is a supplement to the Annual Capital Expenditures Survey. Microsoft makes significant sales to businesses and these are aggregated in the ICT supplement. Here is a press report on the ICT:

Press Release

and here is the actual report:

Full Report

It lets me see sales data and trends in the information technology B2B sector of the economy with separate segments for computer and communications. The most current data, published in February 2009, is for 2007. No one accused the Census Bureau of being speedy. The report is a series of hyperlinks that let me dig as deep as I want, and it even provides me with Excel worksheets of data so I can graph and chart according to my specific interests.
I hope Microsoft is making use of this survey Web report! Dell too.

Marketing Research Utility
I worry for Microsoft. It is in a Gambler’s Ruin competition with Open Source software, which strikes at the heart of Microsoft – its value add to the economy. Open Source offers for free the software that Microsoft sells and that is the basis for its enormous revenue stream. Gambler’s Ruin is a rivalry between two parties, one with a large, well-established position and the other with a small position but able to compete effectively on individual transactions. Of course, Microsoft is the house. Prudence would dictate they worry about the growth of Open Source.

They should worry too, according to the results of the Census 2007 ICT survey. This table from the bureau gives the raw data 2007 ICT Table 1a.

I have graphed it to show the growing problem.

The graph visually shows that computer hardware sales are growing faster than software sales. I used only computer hardware sales data, no communications gear. The difference may be the use of free Open Source software that does not have a sales transaction. The table below shows more precisely the problem:

I derived these from the Census data. As a side note, Linux (Open Source) demolished Sun Microsystems in business server rooms, and Sun is now defunct. Microsoft is fighting hard to maintain its share in the server room, and almost succeeding.

Microsoft has something else to worry over: the growth in software sales is declining year over year. I wonder what is going on in 2008 and today. Kuchinskas (2003, p. 2) reports that in 2000 Dell experienced declining growth in the educational market because of tightening education budgets. They responded with a database-marketing program to the education sector. The Census data above suggests that worse comes. The entire market may be tightening budgets.

Like Dell, Microsoft does monitor market trends using secondary sources like Census, but they also glean information from data mining. In this sense they are the exception to Krol’s observation (2006, p. 1) that technology companies were late to use data to drive sales. One of the selling points we highlighted in MS SQL Server was its data mining capability and how we used it at Microsoft. We could even link to document collections from places like Census.

Unfortunately, my free Census secondary data leaves me short. 2007 data was published in February 2009. Additionally, secondary data may be insufficient. It may not have the granularity I need for a certain conclusion. To get a better sense on my impending demise, I would need primary market research. However, it is worth noting that secondary data, like Census data, may alert the "researcher to potential problems and/or difficulties" (see McDaniel and Gates, 2008, p. 73).

A B2C Report: the Census Bureau E-Stats
The Census Web site has useful business to consumer information such as the E-Stats Report, (see Ebusiness 614). This report is the result of a commitment by the Census Bureau to measure the electronic economy. It has sales data on e-commerce activities by sector. The sectors are: manufacturing and merchant wholesaling ecommerce sales (considered to B2B) and retail and select service ecommerce (B2C) sales. The data of this report is available at 2006 Final Report.

The report gives more detailed breakdowns in its appendices that are located at Census 2006 Tables. One of interest is the select services (see Census 2006 Table 4). It shows the revenue vs E-revenue in select industry groups (identified by a NAICS code). The Federal Reserve Board uses this report to track the diffusion of the electronic economy (see Dinlersoz and Murillo, 2005).

Marketing Research Utility
Businesses that deal directly with the customer can use this report to track trends by NAICS industry group to see how fast ecommerce to consumers is growing in its industry. For example, one of the industry groups currently in select services is Arts, Entertainment, and Recreation Services and e-commerce revenue is growing 21.9% per year (latest eStats data is for 2006). A company like Domino’s Pizza can use such a trend to partner with a company in the growth sector to expand pizza delivery to the consumer.
In fact, they did, partnering with TiVo and NetFlix who are in the Entertainment ecommerce trend. Consumers who stream movies can order a pizza at the same time through technology in TiVo. Secondary data from Census Reports can tell Domino’s about growth opportunities. Behavioral targeting from TiVo can help Domino’s and other companies to grow their online business to consumers.

TiVo (2009, p 2) claims to have the most advanced capacity in the television industry to track behavior. Delany and Steel (2007, p. 1) note that Microsoft engages in behavioral targeting, and according to Jopling (2006, p 3-5), Microsoft has taken a commanding lead in IPTV technology. Microsoft is always looking for new industry segments to exploit, but the question for marketing research is which ones. The Census E-Stats report has useful data to tell us which NAICS codes have strong electronic diffusion. Also, as IPTV grows, Microsoft may eventually want to partner with TiVo and its advanced technology, to provide service to the Arts, Entertainment, and Recreation industry.

Delany, Kevin and Emily Steel (October 2007). Firm Mines Offline Data To Target Online Ads. Wall Street Journal.

Dinlersoz, EM and Hernández-Murillo, R (January-February 2005). The Diffusion of Electronic Business in the United States. FEDERAL RESERVE BANK OF ST. LOUIS REVIEW. Retrieved on May 30, 2009 from EBSCOHOST.

Jopling, Elroy (4 January 2006). Microsoft's Global Consumer Play Begins to Unfold. Gartner, id number G00136841

Krol, Carol (June 12, 2006). Connecting the data dots. Pro Quest.

Kuchinskas, Susan (Sep 2003). Data-based Dell. Adweek Magazines' Technology Marketing.
McDaniels, C and R Gates (2008). Marketing Research Essentials. John Wiley.

Tivo (November 2008). Q3 2009 TIVO INC Earnings Conference Call - Final. Fair Disclosure Wire (Quarterly Earnings Reports). Retrieved on May 30, 2009 from EBSCOHOST.

No comments: