[opendtv] Re: 20060117 Mark's (Almost) Monday Memo
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Wed, 18 Jan 2006 09:29:21 -0500
At 4:58 PM -0500 1/17/06, Manfredi, Albert E wrote:
>John Shutt wrote:
>
>> It seems to be a contradiction to me when on the one
>> hand you say the Accuran was a well kept secret, then
>> on the other hand say they flew off the shelves.
>
>I don't know about you, John, but I had no idea that the
>Accurian, even at its original $249 price point, stood
>out in any way compared with the 3rd gen competition
>on store shelves. I didn't even know it existed, as a
>matter of fact. You would think that RS at a minimum
>would advertize them on OTA stations.
Given all of the things that Radio Shack sells, and the fact that
many companies offer co-op ad incentives to promote their products,
what makes you believe it would be profitable for RS to advertise DTV
receivers versus other products with significantly greater sales
potential?
>The amount of product available is based on demand. And
>demand is created by a decent product as well as consumer
>awareness that it exists. It seems to me that the
>inventory cleared out fast when two things happened,
>almost simultaneously:
>
>1. The price dropped to the point that folks were
>willing to try it even if they didn't absolutely need
>one, and
>
>2. Lo and behold, it tested better than what they were
>already using.
The amount of product available is not based on demand, at least
until there is measurable ongoing demand and market growth. The
reality is that Radio Shack placed an order for some quantity of
these receivers and that they never placed a follow-on order as the
units for the first order did not move. This is not unique to Radio
Shack. We saw exactly the same thing with the Hisense receivers
ordered by USDTV/Walmart. When the USDTV service failed to create
enough demand to sell the quantity of units in the initial order,
Walmart started to "fire sale" them in non USDTV markets.
Now for another reality check. There are about 7000 Radio Shack
stores in the U.S. If every store was required to stock two units,
that would mean that the initial order was for no more than 15,000
units. The actual number could be significantly lower.
Obviously the Acurian receiver did not sell well, which resulted in
the clearance pricing to get these boxes off of the store shelves. I
think you may be confusing the level of demand at the $89 price with
the level of demand at the price where stores could have made a
profit.
Clearly there are enough early adopted enthusiast types out there to
consumer 10,000 to 15,000 units at bargain basement prices. And it is
equally clear that the real "promotion" took place in forums like
OpenDTV and AVS.
The only statement you made that makes sense is that there is a
higher level of demand when the price drops below $100. We're still
waiting for a receiver that sells for less than $100 with normal
profit margins, without subsidies.
Perhaps the $1.5 billion that the Feds are offering up in subsidies
will be sufficient to prime the pump. Then again, consumers could
just say no to DTV, as they have since 1997.
>Just seems to me that everyone is overly timid and
>defensive when it comes to DTT. From the supply side,
>sure seems like everyone involved wants DTT to flop.
You don't create markets with supply.
You create markets with demand.
Best to focus on the real problem here; broadcasters are doing
NOTHING to create the demand, as they are focused on the potential
revenues from re-distribution of their signals.
Broadcasters will not make a dime on DTV receivers, except perhaps
from product advertising; and those ads will not appear until
broadcasters start promoting the DTV transition.
Regards
Craig
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