Listened to the entire CC as well. First time hearing Bernie live.
As has been the thread's concern for months, concur that these guys are weak when it comes to market planning and managing these kinds of distributors. Here we essentially have G* staff fighting a bunch distributor fires (or trying to light some under) that were 100% predictable in advance.
Stupid stuff, like no maritime kit (which I think is mostly mounting and weatherization non-electronics), and the realization that, hey, maybe $995 is a whole lot better price point for the phones than $1,495, and apparently we can get there.
More "stupid stuff" like not being able to make an "800" call as Parkinson reported. And the two-number USA deal, which Bernie now says is no big deal and should be "fixed" by June, 2000. If no big deal, why wasn't it addressed pre-rollout?
Dealing with funky distributors all over the world is not an easy chore. I'll date myself, but many moons ago I was CFO for what ended up being the last American telex manufacturer. Local distributors had similar job to G*'s SP's - marry our terminals with the local carrier (usually a PTT) service, and get the customers rolling.
To say that the Argentine distributors, for example, had a mindset of their own was an understatement. Here are a few things we learned that maybe G* is just finding out:
1. The local distributors need the total offering handed to them on a silver platter, wrapped up in a pretty red bow. If there is any confusion about a new product, the distributor will concentrate on selling something else.
2. Like salesfolk everywhere, they consistently over estimate their forecast from what they can actually do. But it's way worse in South America and Asia.
3. The manufacturer needs field marketing people who at the manufacturer's cost train the distributor's reps, and even go on sales calls to major business accounts. This is an expensive proposition, but without it, sales don't happen. See #1.
4. You got lousy (and late) reports on end-user sell-through. This requires both good contractual covenants plus hiring "naggers" at corporate. Otherwise you end up making statements like Bernie did (paraphrased) - "we'll have no idea what they are actually selling until the end of June."
In the Internet Age, this ain't gonna cut it. G* needs to implement an easy reporting mechanism that even the SP in South Faroffistan can use.
5. Distributors need to be coddled up with collateral materials, trips, sales incentives, promotional discounts, and all that stuff. This needs to be in place well in the front-end of pre-rollout, not as a series of ad-hoc afterthoughts like G* is apparently doing.
6. The head of the chain needs to take the initiative on opportunistic ad-hoc situations. The cratering of Iridium is a fine example. Bernie is leaving it up to the distributors to figure out what they want to do. So, we'll end up with a hodge-podge of different offers, even here in the US. If there ever was a carpe diem mandate, this is it -- but Bernie doesn't see it as his job. It is!
I could go on and on. Bernie, especially in his interaction with his staff, reminded me a lot of my former boss in the telex business. He may make a fine Chairman, but G* really needs a top flight marketing-oriented COO at this junture.
Figuring it out and making up a marketing plan as we go along, which seems to be G*'s current m.o., won't cut it.
It is a major blunder to think that the majority of the SP's can function more or less independently. Other than maybe VOD/Air Touch, they will tend to be a bunch of whining babies -- but that's just their nature. Deal with it in advance.
Might add that QCOM in its CDMA business mid-90's had many of the same issues (working with overseas distributors as well as US carriers) and successfully figured this out. But in the interim, it required a lot of "market-building" initiatives made in advance of product sales, which were expensive for QCOM, hurt P&L, but were well worth it in the long-run.
As far as 2000, top line revenues are going to be way more important that the bottom line. So, if G* needs to spend a few million more on marketing support to hit the #'s, it would be dough well worth spent. (A lot more productive than another day of interest charges matched against too low revenues!)
Still believing in the G* concept, but at this point, LOR looks like a lot less risky way to play both G* and the data satellite business.
P.S. I found it interesting that Bernie thinks McCaw will get ICO going before 2002, essentially by force of personality. So, is Bernie saying that McCaw can do a better job planning to avoid all of G*'s "whoops" unforeseen delays? |
