Yes, they were that stupid. Jacobs and co did not control the marketing. QUALCOMM was a minor shareholder though they agreed the marketing strategy originally, no doubt. But by 1997, they were a supplier, not a dominant shareholder with marketing clout. Vodafone and co had their contracts and control, but Loral's dopey marketers did the same dumb marketing strategy.
Bernie Schwartz said that he doesn't know marketing's tits from its elbows. He thought he had hired the best and brightest to do it. He said it was criminal when they failed. Unfortunately, the best and brightest can do really dumb things, partly because they have an exaggerated sense of their own brilliance. I think it's called hubris.
They thought they had a good strategy, leaving the marketing to the likes of Vodafone who were already established in wireless markets, had people around the world who knew and could handle the local regulatory and employment issues, build and operate gateways and backhaul and so on.
Yes, it was that under-funded. They didn't have enough money to carry them through the filling of the system with subscribers. They had to sell the service cheap for a year or so, to build up demand, but they didn't. They wanted the dopey premium-priced strategy. With creditors breathing down their necks, they didn't have time or money. Once failure was looming, which loomed in the first three months [or three weeks in my opinion], they were doomed to run out of money unless they could get another $500 million to get them through the first two years of the new, revamped, cheap and cheerful marketing strategy. With Vodafone and others in control, Globalstar LP couldn't change the marketing strategy and investors wouldn't just pour money down a high-priced drain.
Of course, having taught millions of people that satellite services are only for the super-rich, it's a hard job to go back and tell them "We've change our minds, you can afford it after all". People just hear "satellite phone" and know it's not for them due to price.
I spent time talking in person to the "best and brightest" marketers at Globalstar and it was like talking to a brick wall. They KNEW what they were doing and didn't need no stinking low rent plan. MBA people do NOT sell on price - that's the lowest of the unimaginative low and beneath contempt and only losers try to do that. They don't get degrees and high salaries to say "Hey, if we make it cheap enough, people will buy tons of the stuff".
They like product positioning and market segmentation going forward so at the end of the day the channel distribution high-end margins are maintained in stochastic analysis of premium vertical market loyalty programs and arpu maximisation flim flam blah blah blah is achieved.
Mqurice |
