<So why wouldn't G* face the same problems as I* ? >
Shtirlitz, Iridium came to market with equipment and airtime prices 3X higher than Globalstar's, without distributors in many (most) parts of the world, with limited phones ready for use and those not working very well, and with impossible-for-anyone-to-meet revenue/subscriber covenants in their debt agreements.
So the answer to your question is:
G* price point is much lower than Iridium's was (yes, I know Irid is cheaper now, but the new prices were only offered at the brink of bankrupty, which it immediately thereafter crossed)
The G* phones are already available in reasonable quantities (several 10's of Ks with 40K per month coming off three production lines) and by all accounts work reliably, are simple to use and have excellent voice quality.
G* has distributors in most major markets, essentially blanketing the Western hemisphere, Europe, Australia, Russia and China with local Service Provider partners which have over 100M existing customers. G* needs about 500K subs for cash b/e, 1M for EPS b/e. A very small fraction of the 200+M cell phones sold last year, so I agree with you, it's a niche product. G*'s total capacity has been estimated as only 7M users.
Finally, the covenants on revenues for G*'s debt don't kick in until 3/01, so there's adequate time to ramp up the market. |
