Thursday, September 21, 2006

Gentlemen, Stop Your Engines

CNN just released a piece titled "11 Big Ideas That Will Change Everything." Most inventions were internet-based and didn't seem that important. Then I read an article on a very secretive company called EEStor that is manufacturing a car engine battery that is aiming to replace combustion engines.

The introduction made me quite skeptical since electric cars have been thrown to the wayside due to lack of power/endurance and recharging time. But EEStor is different. Instead of trying to summarize, I've attached the entire article below.

EEStor's new automotive power source could eliminate the need for the combustion engine - and for oil.

By Erick Schonfeld and Jeanette Borzo, Business 2.0

The Innovation: A ceramic power source for electric cars that could blow away the combustion engine

The Disrupted: Oil companies and carmakers that don't climb aboard

Forget hybrids and hydrogen-powered vehicles. EEStor, a stealth company in Cedar Park, Texas, is working on an "energy storage" device that could finally give the internal combustion engine a run for its money -- and begin saving us from our oil addiction. "To call it a battery discredits it," says Ian Clifford, the CEO of Toronto-based electric car company Feel Good Cars, which plans to incorporate EEStor's technology in vehicles by 2008.

EEStor's device is not technically a battery because no chemicals are involved. In fact, it contains no hazardous materials whatsoever. Yet it acts like a battery in that it stores electricity. If it works as it's supposed to, it will charge up in five minutes and provide enough energy to drive 500 miles on about $9 worth of electricity. At today's gas prices, covering that distance can cost $60 or more; the EEStor device would power a car for the equivalent of about 45 cents a gallon.

And we mean power a car. "A four-passenger sedan will drive like a Ferrari," Clifford predicts. In contrast, his first electric car, the Zenn, which debuted in August and is powered by a more conventional battery, can't go much faster than a moped and takes hours to charge.

The cost of the engine itself depends on how much energy it can store; an EEStor-powered engine with a range roughly equivalent to that of a gasoline-powered car would cost about $5,200. That's a slight premium over the cost of the gas engine and the other parts the device would replace -- the gas tank, exhaust system, and drivetrain. But getting rid of the need to buy gas should more than make up for the extra cost of an EEStor-powered car.

EEStor is tight-lipped about its device and how it manages to pack such a punch. According to a patent issued in April, the device is made of a ceramic powder coated with aluminum oxide and glass. A bank of these ceramic batteries could be used at "electrical energy stations" where people on the road could charge up.

EEStor is backed by VC firm Kleiner Perkins Caufield & Byers, and the company's founders are engineers Richard Weir and Carl Nelson. CEO Weir, a former IBM-er, won't comment, but his son, Tom, an EEStor VP, acknowledges, "That is pretty much why we are here today, to compete with the internal combustion engine." He also hints that his engine technology is not just for the small passenger vehicles that Clifford is aiming at, but could easily replace the 300-horsepower brutes in today's SUVs. That would make it appealing to automakers like GM (Charts) and Ford (Charts), who are seeing sales of their gas-guzzling SUVs and pickup trucks begin to tank because of exorbitant fuel prices.

Friday, September 08, 2006

Amazon Taking On Netflix

The "Unbox"

Amazon (AMZN) officially launched its much-anticipated movie download service today, directly competing with Netflix (NFLX) and other movie services. Dubbed "Amazon Unbox", the online store will sell movies from $7.99 to $14.99 to be downloaded directly to your computer. In addition, Amazon will also sell television shows for $1.99 per episode and rent movies for $3.99.

The advantages are obvious. With a high-speed internet connection, you can download movies in a fairly short amount of time instead of waiting a few days for your movie to arrive via snail mail, as is the case with Netflix. In fact, with progressive downloading, viewers can start watching the video just a few minutes after the download begins (like the buffered videos on YouTube).

These downloaded movies are forever yours. But due to copyright restrictions, you cannot yet burn these movies onto DVD/CD (although I'm sure the geeks are already preparing work-arounds).

The Netflix Advantage

Google & Apple are expected to launch similar services in the next couple months. Should Netflix be worried? Not yet.

There's one glaring concern: who wants to watch movies on a computer? The reason that sites like YouTube have become so popular is because the streams are entertainingly short, not 2 hours long. Although computer screens are getting progressively bigger, they still cannot compete with the larger television screens (especially HDTVs).

High-speed internet connections will also be a huge hurdle. For many, Netflix is an cheap alternative to high-priced cable. These cost-conscious consumers most likely do not have expensive high-speed internet in the first place! With most movies approaching 1 gigabyte in size, average connections will take hours, if not days, to download an entire movie (assuming there are no interruptions!).

The $3.99 price tag for movie rentals is also inferior to comparable Netflix plans. I currently pay $12.99/month for the unlimited 2 DVDs at-a-time plan. This normally equates to 10 movies rentals per month, or roughly $1.29 a movie. Is it really worth an extra $2.70 per movie to download from Amazon?

In the past year, Netflix has been displaying very high customer loyalty with low churn rates. With the popular “Friends” network and an average movie queue over 50, it will be tough for Amazon to steal away customers from Netflix.

If Walmart & Blockbuster failed to take on Netflix, why will it be any different for Amazon?