Convetional wisdom in the CE world is to initially price a new tech product at the highest possible figure.
In the cases of Divx players and Zenith's first HDTVs, this could be a counter-productive pricing strategy.
I layed out my reasoning for Circuit City's Divx pricing here:
dvdresource.com
Same goes for Zenith's Divx players and HDTV sets. The scenarios for
both products are remarkably alike. Each is a new entrant into a well mature market (VHS for Divx and analog TV for Zenith's HDTVs)and seeks to become the defacto new standard in its class while facing strong competition from very powerful corporations offering alternative standards.
The very obvious temptation for Zenith will be to maximize its profits over the short run. According to what I heard from Zenith staffers at the annual meeting, this is their path.
But, is it smart? It sure isn't the way Gates plays it. When he wants to dictate the standard, he sells at or below costs until the competition dries up.
I'd play it both ways. Zenith Inteq can attract the early aficionados whom want and have the bucks to pay for very high quality. This represents no more than 10% of all CE buyers but also represents about 65% of the profits (my estimate). Deliver the best (largest possible screens, fine woods, top circuity, beautiful design, etc.) and they will buy.
Zenith Classic (suggested brand name) would be both Divx players and HDTV sets targeted to compete head on with competitors offering products with competing standards (DVDs and high progressive-scan output SDTVs) and thus be priced at cost; the sole objective being to establish the defacto standard.
Remember: Progressive-scan transmisions-Zenith loses. Interlaced scans (with Zenith earning a royalty on every VSBi receiver in the world, etc.)- Zenith wins.
Compaq, Microsoft and Intel are masters at this game and certainly will be formidable competitors (along with most of the Japanese CE industry). Giving them too large of a window of opportunity (pricing differential) is not a smart move.
I very well may be entirely off the mark. HDTV could sell itself regardless of pricing strategy. I've seen HDTV and can report that it's as near to reality as one could expect from CE. The competing standards still are just boxes with pictures inside. This isn't the feeling you get with HDTV. When viewing sports, you'll feel like you are at the game. Watching football, it's a guaranteed 50-yardline seat with the whole field constantly in full view.
Heard that the Winter Olympics will be broadcating some HDTV. Not sure who will be able to send and receive the 1080 VSBi transmissions, however.
I like the timing: consumer models of HDTV introduced at International CES in Vegas, January 8-11; Winter Olympics in late February for first "big event" HDTV feed: Zenith sells HDTVs (and Divx players) shortly thereafter.
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