Brendon,
The battle that Cybermedia is in must ultimately be won at the OEM
level. Just imagine if Microsoft only sold Windows at the retail level.
That's great for gaining a little "mindshare", but Microsoft won by
getting their product on over 80% of the PCs shipping.
Think about the numbers too. Cybermedia has been able to sell
about 2 million retail units out of the over 100 million PCs sold in
the past couple of years. If the product retails for $39, then they
probably sold it for less than half of that to their distributors or for
say $20 per unit. Then consider the costs of packaging and the
huge amount of advertising that goes into retail.
If Cybermedia sells 2 million retail units at $20 each, they gross
$40 million and their net will be much less.
Now, if they capture 50% of the OEM market when the same
100 million PCs are sold and they make only $2 per unit, they make
$50 million gross, and their packaging and advertising costs are
much less.
So, while the unit revenue is smaller, the OEM business is at least
as profitable if you have a product that is actually worth something.
In reality though, if a competitor had a product that was only
"adequate" and managed to get 60% of the OEM market while
Cybermedia only had 10%, its likely that Cybermedia would lose
tons of retail business anyway. If I had a product that came bundled
with my PC that solved 80% of the both perceived and real problems
that Cybermedia did, there's a much lower chance that I'll go out
and pay $39 for a Cybermedia package too.
Cybermedia was smart to build an alliance with Phoenix Technologies
targeted at the OEM market. Phoenix (PTEC) will own 50+% of the
OEM BIOS market this year and is bundling and co-developing
powerful BIOS-based tools with Cybermedia. There's no reason
for them to give away the product like SYSF has, simply because
there is real value in a proven product integrated with the core
system software (in the OEM version). |
