I'm sure they don't break down the costs by unit, and yes, they were IIRC selling the hardware at a loss, in aggregate.
However, what's past is past. It's the marginal cost of those units that matters, or perhaps simply what inventory looks like, if they're discontinuing the 40-hrs.
I strongly disagree that the proposition isn't attractive. They're locking in a bare minimum of $156 on each unit they're sending out. And again, fewer than half are opting for the lifetime fee. If someone quits after a 1-year contract, is Tivo losing money?
I'm not sure, but I do know it's absolutely irrelevant. Churn is low. IMO we're far more likely to see customers paying $12.95 monthly for the next 4-5 years than seeing customers cancel after 12 months. The more relevant question is what's the net present value of that customer? At a minimum, $156, and on average, perhaps $300-$400 in subscription revenues (less the cost of getting them the hardware). Who knows what they might be worth if other revenue streams grow, or from a shareholder perspective as the company itself grows?
I suppose we've done the complex assessment in our heads and come to different conclusions :)
Andre |
