Price cuts

[polo_pro]

I was reading several news articles about the iPhone price cut. A few articles mentioned how iPhones had only been released to the public a short 10 weeks ago, and how many many loyal Apple consumers were going to be miffed about paying $20/week for the privledge of being an early adopter. But I saw that line of thought as "distracting" from the real issue.

Apple wants to sell a million iPhones by Sept 30th. To be consider a serious contender in the cellular phone market, they can't afford to miss that milestone. So they dropped the price by 33%. Seems like a smart move, because if Apple falls behind in sales it'll snowball till no one takes them seriously in this new market.

Now here's how it relates to segways. Sure a segway isn't viewed as a necessity, like a cell phone. But the iPhone is one of the highest priced cell phones out there...it's price makes it hard to justify the purchase (over say a Razor). Well almost the exact same thing can be said about segways....and the Razor (scooter) comparison even works!

Maybe back in 2004, Segway LLC should have cut the price of the i167 to $3000? The decision makers at Apple sure think so. And they're in the same boat as Segway was back in 2004. Both had huge capacity for manufacturing their product. Both had generated huge amounts of hype. And I'll say that both failed to price their product so that it'd "take off" and be in every fourth household.

ps - One difference is that Apple has a very good distribution network. And Apple also made the right move partnering with AT&T (even if the relationship isn't going so well). Segway instead spent that effort in lobbying legislatures and setting up an impromptu dealership network that never really panned out when it comes to selling hundred's of machines per month per dealer. Heck, even a later partnership with Sam's Club in 2006 barely achieved that milestone of selling 100 segways per month! Does anyone know how many p133's were blown out by Sam's Club back in 2005?

[hellphish]

The difference is that the margins on an iphone are over 200%. Do segways cost less than 2000 bucks to make? I thought the batteries alone make up a big part of the price.

[quade]

Maybe back in 2004, Segway LLC should have cut the price of the i167 to $3000?

Had they, I know for a fact I would have bought one in an instant because since the inception of the Segway that was the price point I was looking for.

However, I understand that setting the price of a piece of merchandise is perhaps one of the more difficult decisions a company makes.

I my altruistic, nearly communistic, way of setting prices, things would more or less cost what they cost to; admin + make + ship + market + 20% for profit. However, that's simply not the way capitalism works. Investors and shareholders will always want to see "bigger" returns but that may actually be the wrong thing to do.

I think Segway pricing is WAY out of line for the purposes of mass marketing, but may be exactly right for corporate sales.

[BillPaxton]

Originally Posted by quade

Had they, I know for a fact I would have bought one in an instant because since the inception of the Segway that was the price point I was looking for.

Same here - My father-in-law was non-ambulatory but had no problem standing at all. We discussed getting him a seg since the first one we saw at Epcot, but unfortunately we couldn't talk him into the 5.5k and we didn't have a spare dime at the time...I could have come up with 3k tho

[polo_pro]

Originally Posted by quade

Had they, I know for a fact I would have bought one in an instant because since the inception of the Segway that was the price point I was looking for.

Me too. If I'd started shopping for my first segway a year earlier, I'd probably have ended up with a p133. But luck was with me, and enough time passed so that used i167/i170's came down enough in price to get me off the fence. Well, also with the i180 being functionally equivalent too the older models, I didn't feel any need to spend the extra $2K for something 'pretty shiny colors' and 'cheaply upgradeable to Li-Ion batteries' ($500 coupon for those of you who remember).

I will say that both the e167 and x2 have caught my interest, because I feel they're different enough to merit being given a different model number. Last year, I did find an e167 cheap, and I won't be surprised if I have an x2 by the end of this year (even if they aren't sidewalk legal here in Cali). OK, I'm cheap....I know it....maybe the x2 will come in 2008.

[BillK]

Dont forget that on the iPHONE there is residual income.

Have you ever noticed that printers are cheap? But the ink is expensive?

Segway does not have the residual income - once you buy it it is yours and you dont owe anyone monthly money.
Bill

[quade]

Originally Posted by BillK

Segway does not have the residual income - once you buy it it is yours and you dont owe anyone monthly money.
Bill

No. Just another huge chunk of cash when one of the batteries goes bad.

It's not exactly like you can buy them from anyone else.

[bystander]

In my opinion, the only possible way to make a price cut work, would have been to introduce the PT at $8-10k, and discounted from that. Discounting from $5k is with the current models is very wishful thinking, imo.

When they liquidated the p at $2500, & the xt at $3900, it's was apparent to me what rock-bottom is/was. No margin at that price level, just reducing inventory liability, so it's worth moving them out at that point.

More opinion here.

As much as I'd like to see a PT for $3k (new), I just don't see it happening with the current models unless one is willing to wait several years for inflation to catch up.

And it will be tough to design a successor PT at a lower price point while retaining all the toughness and reliability of the existing models.

P.S. I agree with what BillK said

[bystander]

Originally Posted by quade

No. Just another huge chunk of cash when one of the batteries goes bad.

It's not exactly like you can buy them from anyone else.

This is OT, but if you read around about electric car batteries, there has been some talk about manufacturers selling the car w/o batteries, and then offering a monthly service plan for battery rental. It's more expensive on a monthly basis, but the customer wouldn't be liable for battery failure (with normal usage).

If the idea caught on, and more PTs are sold, perhaps this method could be adopted by an enterprising dealer?

It would make sense for fleet operations, or individual users that depend on the PT for regular commuting. Recreational PT users may not obtain a cost benefit.

[BillPaxton]

http://www.treehugger.com/files/2007...r_3000_the.php how can Inc compete with 3 different companies offering sub 3k cars as soon as next fall?