The Miami Herald from Miami, Florida • 42

MONDAY, JULY 5,19 THE HRAID Best Buy, Musicland take to Web I' C-H 1 Advanced technology has come a long way Sutton estimates that Internet music sales, which were worth just $37 million in 1997, could hit $1.5 billion in three years. At the same time, the overall prere-corded-music industry, which had slightly less than $13 billion in sales last year, is expected to keep growing at the rate of 5.5 percent a year for the next several years, he said. Strong roots in retailing FuncoLand Funcos strengths on the Internet are in its roots as a retailer. FuncoLand Superstore Web site sales last year were $1.6 million, four times higher than the previous year. While thats not even 1 percent of its $206 million in sales last year, it could continue to grow, to $5 million this year and maintain that pace over the next few years, said Bob sites such as CDNow and Amazon.com, Eugster said.

Including shipping costs, Musiclands prices generally will be a bit lower than prices in its mall stores, such as Sam Goody and Suncoast Motion Picture and a bit higher than prices in its superstores, such as Media Play and On Cue. Weve done some comparisons with CDNow and Amazon, and if you add in shipping and handling their prices are about 10 percent higher than Media Play, Eugster said. Musicland will not promote its site through traditional Web arrangements, such as links to Yahoo or America Online sites, but mostly will piggyback the Internet venture on its $65 million annual ad budget. The company also plans to spend about $2 million on other advertising, most likely on the Internet, said George Sutton, a securities analyst with Dain Rauscher Wes-sels. Ramos poses this question: Can Musicland grab Internet sales by relying on traditional advertising? Online retailers invest about 65 percent of sales back into marketing, while traditional retailers invest 4 percent, according to the Boston Consulting study.

On a per-or-der basis, online retailers spend $26 on average, while traditional stores spend $2.50. Heavy marketing Heavy spending on marketing is the main reason online retailers have trouble making money. For instance, in its first quarter, CDNow spent $26 million on Internet marketing for $36 million and ended up losing $38 million. By limiting its Internet advertising, Musicland hopes to keep its losses to $5 million over the next two years. We will have losses, but we dont want huge losses, Eugster said.

One issue that music retailers face that other industries do not is the ability to download music over the Internet. Musicland and CDNow could be cut out as middlemen, as artists or labels sell directly to the consumer. But it may be years before downloading is a serious threat, because its a frustrating and time-consuming process without high-speed Internet connections, Sutton said. It wasnt long ago that recordable cassettes were supposed to steal business from the music industry, Tashjian said. Instead, it grew.

RETAIL, FROM 9 We can use our stores in neighborhoods as points of contact with consumers, Warden said. Thats a big advantage over someone who ships products from a central warehouse. The question is: Can Best Buy develop a talent for the direct marketing that delivers products to individuals, not stores? For the most part. Warden believes Best Buy can perform these functions on its own, rather than use an outside distributor. Still, as the nations biggest sellers of computers and consumer electronics, Best Buy will benefit from the Internet boom regardless of whether it sells its merchandise there.

Thats because the popularity of the Internet, as well as declining computer prices, has fueled an impressive boom in personal computer sales. Whats more, Best Buy could take advantage of its status as a top computer retailer by pre-loading software that directs PC buyers to its Web site, Warden said. Traditional strengths Musicland aims to be the Internets low-cost provider in home entertainment by using its strengths in purchasing and distribution. Musicland believes it has 12 percent lower costs than online retailers who use outside providers, according to Tom Tashjian, a securities analyst with NationsBanc Montgomery Securities in San Francisco. We will do it all ourselves, Eugster said.

We will have no outside providers. Heres how they shave costs: Unlike online competitors, such as CDNow, who buy through distributors, Musicland can buy music directly from the record labels, cutting out the distributors 5 percent or so markup. (Amazon.com is building its own distribution structure). Musicland already has a $23 million direct-marketing business in special orders, which allows it to save nearly 5 percent in costs over online music retailers that use third-party distributors, Tashjian said. The music retailers extensive customer database and loyalty program save 2 percent or so in costs over online competitors that must pay for databases.

Web prices lower The merchandise will be priced to be competitive with By JOHN GILROY Washington Post Service Q. What is the difference between 1 6-bit, PCI and AGP video? A How many of you recall i the days of IBM AT computers? (That would be the mid-80s, and, believe it or not, AT stood for advanced technology.) In these machines, a 16-bit bus, or internal data-moving system, was the standard way for the video card to handle the images presented to it. That worked fine for years. But when the megahertz speed of the machines microprocessors started to approach three figures, computer makers looked for ways to make the image on the screen better and better as well. One bottleneck in putting screen elements, or pixels, on the monitor was the motherboard, the computers main circuit board.

Designers altered it and the video card slot to make them faster. The result was PCI (peripheral component interconnect) and AGP (advanced graphics port). PCI allowed the motherboard to move data 32 bits at a time. This yielded a transfer rate between the computer and the screen of 133 megabits per second. Generally, the faster the transfer rate, the better the image.

AGP was an even faster way to get those pixels pop-pin on the monitor. The initial version hit the market in mid-1997 with speeds up to 266 megabits per second. AGP does require that the computers chip set specifically supports it, and you need Windows 95 OSR 2.1, Windows 98 or Windows NT 4.0 or later versions. Purists will argue that video is a multidimensional issue and speed is only one aspect of what makes a sharper image. But why argue it? AGP is inexpensive enough to be on most new machines these days.

Q. When I turn on my com- puter, I get DMI error. Whats that? DMI stands for desktop management interface and is a relatively newfangled way of making a personal computer on a network easier for the people in the systems office to manage. The past few years have seen more and more reports from consultants about the TCO, or total cost of ownership of a PC. They have concluded that having a personal computer on a network is a very expensive proposition, what with all the maintenance they always seem to need.

One way companies try to lower that cost is by altering the BIOS (basic input-output system) of the computer to put in DMI capability that allows the system administrator to see what is going on with a specific machine. Needless to say, this solution makes a whole new level of conflicts possible. Our reader has just come across one. To fix a DMI error, you have a hodgepodge of places to start looking. For instance, if you have recently added a video card you got at a yard sale, it may not be compatible with the DMI-altered BIOS.

Solution: Get a new card, you tightwad. Some people who try to make their machines run faster than they were designed to go (this is commonly called overclocking) get this error message. Solution: Dont overclock. Finally, there are reports that upgrading operating systems can cause conflicts between the new operating system and the DMI setting in the BIOS. Solution: Go to www.microsoft.com for updates and remedies.

Q. I am having a problem upgrading my video card. The new card seems to install fine, but my monitor settings still indicate the old one. A Over the past five years, I have used gallons of ink telling readers to install the correct software driver for a new device. I should also have been saying that when you do so, make sure you get rid of the old stuff too.

So when youve installed a new device, go to the control panel and addremove programs and remove any mention of the device you are replacing. If you are on top of things, you may already be using a program such as Uninstaller that will do this job better than the built-in utilities in Windows. -mail: jgilroyiteminc.com Launching a Web site is more than just a defensive strategy for brick-and-mortar retailers. They're serious about it and say they have the speed and strengths to win. Hiben, Funcos chief financial officer.

Whats more, Funco makes money on its e-commerce business. Weve been profitable fromi the outset, Hiben said. After all, our roots are in the mailorder business. Funco still has a mail-order catalog operation and sends its catalogs out every other month. While the several million dollar a year business has been dwarfed by its retail sales, Funco has kept it alive, Hiben said.

In doing so, it provided the infrastructure for its e-commerce effort. The FuncoLand Superstore Web site has expanded its product lines to include entertainment computer software and also offers some of its new and used products on Amazon.coms new auction site. A Condo in Kendall or a Ranch in Davie. Jeeps or Jaguars. Great Danes or Chihuahuas Whatever your preference, i find it for less in Herald MAXClassifieds.

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