[opendtv] Re: CE sales Agenda
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Mon, 28 Nov 2005 08:16:14 -0500
Bert wrote:
>And I could almost accept that from a retail outlet,
>which likely gets some sort of compensation for pushing
>different services from the service providers, but the
>CE manufacturers? What's their excuse?
They are in business to make a profit; they do this by meeting customer needs.
They have no obligation to help one of the most profitable industries
in the Untied States - Television Broadcasters - to promote a new
standard that the broadcasters will not promote themselves, despite
the fact that they have one of the most powerful promotional engines
in the world, which they can use at virtually NO COST.
Several decades ago the CE industry realized that the traditional
approach to developing and selling electronics products for the mass
market was seriously flawed. They would create the platform, work
together to develop cheap components, then eat each other alive to
drive down the cost of the product. Meanwhile the profits were being
made by the folks who controlled the content that is consumed with
these products - the media conglomerates, record industry, etc.
So they started looking for ways to create after the sale revenues
when they sold a cheap box. The first home run was video games. The
old razor blade trick worked to perfection - sell the console at cost
and keep people coming back to buy the games at $40-60 a pop. This
has been the one bright spot for Sony over the last decade. They did
it again with DVD, making cheap players, and filling the stores with
"software." And they did it again with DBS, pushing the receivers in
return for royalties paid out for 1-2 years.
And then there were the efforts by the Japanese to buy their way into
the content business. Sony Matsushita et al. These attempts have
largely failed, because producing content is not something that you
can build assembly lines for. It is a "let's do lunch" business, and
Sushi is definitely not on the menu.
There are a few product categories where volumes are low and profits
are reasonable. This was the case for home theater, until the DTV
transition took what was a profitable niche market and started
turning it into another mass market with eroding margins. But selling
big screens is still far more profitable than selling $200 27" NTSC
receivers.
That the CE industry has changed should come as no surprise. It is
the nature of a highly competitive business. What is remarkable is
that the TV broadcast business HAS NOT changed in response to
competition. Why?
Simple - broadcasters live in a protected world where profitability
is guaranteed because of political gerrymandering. There is NO MARKET
at work here, only minor squabbles over how to divide up a pie that
is now worth about $40 billion annually ( and this does not include
any back end profits from the content that runs first on the
broadcast networks.
>But on a much happier note, my wife, commissioned by the
>jolly guy in the red suit, managed to unearth an
>Accurian ATSC receiver from a Radio Shack not too far
>from where we live. So we rushed our sleigh out there
>last night before it was too late. Now of course it has
>to wait until the appointed time before it can be tried.
Congratulations Bert. It looks like we will all be getting a
Christmas present this year!
Finally, related to the previous topic, this column from
EE Times, about Peter Drucker, seems quite appropriate.
An excerpt here, then the whole column:
> The corporation is an element of society, he said, not
> just an abstract economic construct or legal entity.
> Its purpose is to serve customers, not to make a
> profit. Drucker's observation that the purpose of
> profit was merely to fund the necessary risks
> undertaken in the service of customers was so
> revolutionary that it is today rejected outright even
> by many who will pay him tribute.
Drucker was wrong about the profit motive. He was correct about the
need to serve customers.
In an open competitive marketplace, if you don't serve the customer
you probably won't make a profit. Modern management techniques are
very important to the success of any corporation. Some companies have
done incredible things by focusing management attention on product
quality and customer service. I don't think that this is
revolutionary; I think it has always been the case in competitive
businesses.
But all management rules are off when an industry is protected from
competition. You do not need to look far to see the companies and
organizations that do a lousy job with customer service, while
forcing people to accept an inferior product. In virtually every case
you will find a government bureaucracy, or an industry that is
regulated by the government.
Just look at what is happening now with Wal-Mart. They are arguably
one of the most successful retailers in the world, but they have been
villainized, because they are "ruthless competitors without a social
conscious."
> Even more troubling, today we see corporations not as
> organizations to serve their customers, but as
> - ironically - the fiefdoms of the managers who should
> be serving them, and ultimately as the personal property,
> in some abstract and carefully unexamined sense, of their
> shareholders.
Corporations ARE the personal property of their shareholders.
management is there to serve the interests of the shareholders. To
make a profit.
What is deeply troubling is that corporations now spend a small
fortune lobbying the politicians for "competitive" advantage.
Bill Gates had no time for the politicians, until he had created a
virtual monopoly that needed to be protected.
Perhaps it would be more informative to look at how much the world
has changed during Drucker's lifetime, and why, rather than ascribing
these changes to a style of management that he advocated.
Regards
Craig
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