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Getting the green light

National | S&H Green Stamps enter cyberspace, while Encyclopaedia Britannica and IBM hit hard times

Issue: "Ken Starr: An honest cop," Nov. 13, 1999

Not your Mom's green stamps
Armed and ready to attack the new economy, a classic brand is coming back with a digital transformation: S&H Green Stamps. Generation X and later generations won't remember them, but they were a standard item in retail stores for decades. In 1964, The Sperry & Hutchinson Company printed three times as many stamps as did the U.S. Post Office, but they were for earning merchandise, not mailing letters. Now Green Stamps are becoming Greenpoints and the company wants to fight its way back to the top. Green Stamps became an institution after they were launched in 1896 and held strong until inflation hit in the 1970s. Stores gave them away with purchases to shoppers who collected them in books and turned them in for free merchandise. Then prices shot so high that many stores found the program too expensive and dropped out. After years of languishing, Sperry descendant Walter Beinecke III found a band of supportive investors and bought the company, vowing to use the Internet to save the family business. The new Greenpoints are a cross between the old Green Stamps and their cousin, the frequent flyer program. Retailers (both online and offline) award points, and customers cash in on the website. Others are working on similar programs (such as ClickRewards), but Mr. Beinecke and his cohorts hope customers will remember Mom's old stamp book as they surf the Web. A treasure, if you can get it
Doesn't anybody want to buy an encyclopedia anymore? The venerable Encyclopaedia Britannica is giving away all 32 volumes and 44 million words on the Internet. What costs $1,250 per set is now free online-that is, if you can get to the site. Britannica.com went live on Oct. 19 and was promptly deluged with users from around the world. The servers collapsed like Humpty Dumpty off a wall. Up went an apology for the "temporary slowdown" and a promise that the new site would be back soon. It was just another tough moment in a wild decade for the institution founded in Scotland back in 1768. The print Britannica's annual sales peaked in 1989 at about $650 million, then dropped 80 percent due to competition from high-tech tools. Microsoft's Encarta took the market by storm, offering an OK product at a cheaper price. Britannica ditched its famous door-to-door salesmen, started minting CD-ROMs, and began offering online subscriptions; yet the market leader remained stuck in second place. Now the Chicago-based company is going in two directions with the big book. The print volumes are making a comeback with a new edition in the works, while a high-tech startup called Britannica.com, Inc. will run the advertiser-supported free site. Encyclopaedia Britannica, like Webster's Dictionary and Roget's Thesaurus, is a pillar of the English-speaking world. Even though it largely discarded its Christian heritage generations ago, it is the only major encyclopedia that has heavy intellectual weight. Big Blue's big retreat
IBM introduced the first PC back in 1981, but next year's model may be hard to find. Big Blue has been falling behind in sales for years and is yanking the Aptiva, the direct descendant of the original, out of stores. The computers will remain available, but only through ibm.com. This retreat is the culmination of a long slide. IBM built the first PCs, but didn't control their parts. Other companies, notably Microsoft and Intel, did. That made room for so-called "clone" manufacturers to spring up in the 1980s and undersell IBM on similar machines. By the 1990s, IBM could no longer dictate the machines' future. Clones became so hot that they weren't "clones" anymore. At first they were "IBM compatible" until people stopped thinking about Big Blue. Now the systems are just "PCs," made by former cost-cutter outfits like Dell, Compaq, and Gateway. IBM's tactical blunder led to a near universal standard on the desktop. The price of PCs crashed in 1997, leaving scads of good PCs selling for under $1,000. IBM simply wasn't nimble enough to maneuver and lost a lot of money. IBM's Personal Systems Group lost about $150 million in the second quarter of 1999 and nearly $1 billion last year. So to cut out a lot of middlemen, the Aptiva business went online. Hundreds of employees were laid off. "We need to restore this business to profitability," IBM spokeswoman Trink Guarino said. Moving out of stores "will save us a lot of money." But online computer sales are not easy. Many people like to comparison shop and find the system-often from Dell or Gateway-that fits their specifications. Can IBM keep its historic line? Sometimes, just being high-tech isn't enough.

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