Why a Chromebook is Great for (Most) College Students

Recently, I purchased a Samsung Chromebook as my primary laptop.  I feel that many college students out there are intimidated to buy a Chromebook because of its perceived limited capabilities.  However, I am writing this blog to dispel those thoughts, with a few caveats of course.  A Chromebook is not suitable for every student, but will meet the needs of most.  The big scare behind the Chromebook is the lack of a hard drive.  

That is right, there is no place internal storage other than 16GB that is provided for app downloads exclusively through the Chrome Store.  You cannot save pictures, word documents, or videos to your Chromebook.  Also, you cannot download programs such as MS Office or Photoshop to a Chromebook.  So, if you are an art major that needs to use Photoshop, the Chromebook is not for you.  If you need to download programs that are not available through the Chrome Store, the Chromebook is not for you.  If you do not fall into this category, the Chromebook is probably a great option for you.  

This is where I will dispel the rumors about the Chromebook not being functional for most college students.   First, the price point, only $250 is great and beats almost any other laptop out there.  The other Chromebook products are similar in price and functionality. It is extremely light and easy to transport between classes, not weighing your backpack down.  To attack the critics that say a laptop is not functional without an internal hard drive, most students need to really think about what they really use their laptops for.  Most business students, like myself, only use their laptops to surf the web to do research and type word documents.  The Chromebook provides great WI-FI connectivity and allows you to store documents through Google Drive.  Google Drive is a cloud based storage system, and with the purchase of a Chromebook, you receive 100GB of storage (compared to the standard 2GB).  100GB is much more storage than 99% of any students will ever use.  You have the basic equivalents of MS Office through Google Drive, as well.  Google Docs functions as your word processor and does a great job.  An added bonus is that all Docs are stored to the drive and saved automatically, so you do not need to worry about losing your work.  Also, these Docs can be accessed on any computer that has an internet connection through the Drive.  No more flash drives or constantly emailing documents to yourself!  So far, I have really enjoyed owning a Chromebook and would not consider buying a laptop that ran on Windows or OSX anytime soon.  This machine provides everything that I need and does it well.  No gimmicks, just what I need.  

What is wrong with Flotrack's Business Model

For those of you who are not familiar with Flotrack, the website offers video based content for the long-distance running community.  Flotrack has amassed quite a following recently and does a great job engaging with the community through Twitter and other social media services.  Flotrack has built their current following on re-popularizing the often overlooked sport of distance running to the masses.  Their slogan, “Track is Back”, encapsulates their mission and purpose as a brand.  For the past three years, Flotrack has skyrocketed in popularity and done a great job promoting the sport in a unique and fun way.  

However, more recent business decisions have divided their customer base and have a poor value proposition.  Flotrack has hurt the running community by enacting a paywall for a portion of its content.  Before you call me naive, I understand that Flotrack is a business that, beyond all of the “re-popularizing the sport” intentions, needs to make money.  It is a business, Flotrack’s end goal is to make money and I am not suggesting that it become a fluffy non-profit.  The implementation and business practices of enacting this paywall is where Flotrack really missed the target.  First, let’s examine the demographics of who is consuming this content of Flotrack.  It is mainly high school and collegiate runners who are interested in learning more about the sport they participate in.  These target market does not have an excess of cash to spend on a premium video content service, especially struggling college students.  Flotrack offers two subscriptions: 20 dollars per month or 150 dollars per year (which is billed annually).  This is where the value proposition comes into play.  Comparing Flotrack to other video subscription sites that are protected by a paywall shows a substantial gap in quality and quantity of content provided.  Both Netflix and Hulu charge only 8 dollars per month for their premium services.  Simply put, Flotrack does not provide over 100 percent of the value that Netflix and Hulu both provide, that is simply ridiculous to state.  Also, one could argue that almost all of Flotrack’s video is shot, directed, produced, edited, etc by Flotrack, which drives costs up, whereas Netflix and Hulu simply aggregate and license content.  Another ridiculous argument for many reasons.  First, Netflix has developed several original series such as Orange is the New Black, House of Cards, and the reboot of Arrested Development.  Also, the license agreements for the massive amount of content that Netflix and Hulu provide is not a small expense.  Netflix paid 1.3 Billion in licensing fees in just the first quarter of 2013.  Yes, billion with a B.  Netflix is attempting to vertically integrate to cut down these exorbitant licensing costs.  The value provided by Flotrack compared to Netflix is not even close.

The way that Flotrack has run their premium model has not maximized profit and left some serious questions about their customer service.  Lets set up this example that has almost assuredly happened many times to potential customers for Flotrack.  I am a passionate mom who loves to watch my little kid run in his races.  However, his race is in California and I live in New York.  Pretty tough to go out and watch him, right?  Well thanks to Flotrack, there is a great live stream of the race so I can sit in the comfort of my home and watch my son run.  However, because Flotrack often negotiates exclusive deals with these meets, the only way to watch him run is through Flotrack Pro.  Understandably, the costs to live stream long track meets are probably substantial and I totally get why Flotrack would expect people to pay for this content.  Here is the kicker, there is no option to purchase the live stream as a standalone product.  This mom will have to either purchase the 20 dollar monthly plan or 150 dollar yearly plan.  Many people are not going to lock themselves into a month or year contract for something they are really only going to use for a couple hours.  Why can’t Flotrack charge 5 dollars per viewer for the meet?  The fact that Flotrack has not implemented this absolutely baffles me.  They are losing out on profits as well, from parents and others that would purchase the live streaming meet as a standalone product.  

Flotrack has a long way to go before they can truly demand 20 dollars per month from a value perspective.  I think that the initiative that Flotrack took to create premium content for the running community was a good one, however, it has been executed upon poorly.  Opening up the product to standalone videos live streaming meets could increase profitability and seems like a no-brainer.   I hope that Flotrack can correct the problems with their premium service, so that they can further advance their original mission of bringing track back.  

Is JCP a buy?

Amid the highly publicized turnaround of JC Penney’s, is the stock a buy?  Virtually all news outlets have been running negative stories about the company and many debt analysts have predicted that the floor for the stock could be very low.  Trading roughly around 7 dollars per share currently, the big question is how low the stock could go.  With the company losing 16.2B in market cap since 2007 and a projected 1B dollar loss in sales for 2013, it would seem that the stock has not hit rock bottom yet.   A large risk for potential and current investors is whether or not this floor is going to end in bankruptcy.  JCP seems to be caught in a cyclical downturn due to inventory problems.  Poor selling in Q1 and Q2 of 2013 have left the company with a surplus of inventory, which is frequently being sold at high discounts, and in turn squeezing the profit margin out the door.  The heavy discounting that has been in place at JCP stores has discouraged investors and a sell order is out on the stock from many financial analysts.  

To add to the turmoil, JCP severely confused investors over their efforts to raise 800 million in a secondary offering recently.  The confusion came about because CEO Mike Ullman stated only one day before the offering became public that JCP was sufficiently liquid and did not need to raise capital.  In response, stockholders have filed lawsuits due to the corporation failing to reveal its liquidity.  As noted, Mike Ullman stated a day before the secondary offering that their liquid structure was fine.  However, the 785 actually raised from the secondary offering will support their operations activities for the next two years.  I can see why investors would think they are being mislead.  Oh wait, I am not quite done yet with this secondary offering.  Goldman Sachs underwrote this offering, while, at the same time, Goldman Sachs analysts published that investors should be wary of a JCP defaulting.  Ouch!  

The holiday season will be a huge test for JCP and likely be the defining point for the company. Analysts are predicting this holiday season to be a discounting war from competitors Macy’s and Kohl’s.  This news is bad for the company, as this price war will continue to squeeze its gross margin.  If these margins get squeezed, JCP could burn through some of its liquidity in efforts to cover operating expenses.  This could end up putting JCP into the familiar situation that they are currently trying to dig themselves out of.  The company reports that it has enough capital to cover its operating expenses through 2015, but a poor holiday performance with low margins could shorten this projection.  

So, where is this floor?  Should I buy?  I believe that the floor has not been hit yet.  If the company was to liquidate to assets currently, it would be worth 324 million, or 1 dollar per share.  The holiday season will sink or swim for the company.  Expect shares to plummet if they do not meet sales expectations during the holiday season or if they are forced to cut down their margins again.