7 years. Doesn't time fly when you're having fun? It's also fun to see round 2 coming up.
Sadly, progress over the past few years in recovering from the initial huge marketing blunders has been poor, with more of the same being the main approach. There has been some concession to the idea that lower minute prices is better. Unfortunately, the lowering has been too little too late, so demand has not really been proven as it might have been.
The problem now will be to convince new investors [or we old-timers once again] that what's on offer is value for money and that the management who will run it have got some idea of how to do it. Neither is a slam dunk.
GG's analysis of the MSS market in 1999 wasn't spot on. He thought it wouldn't make any difference if the price per minute was cheaper. Of course it does. Price is the primary arbiter of demand. If it cost nothing to use a Globalstar phone, there would huge demand as people put them in their cars and stop using terrestrial services, and especially roaming terrestrial services which cost a lot.
Until the price per minute is so low that people don't care about it and make as many calls as they feel like, price is an important factor. It's far from that.
But there are 210,000 subscribers and there is real money coming in. There are new phones nearly ready [albeit single mode] and more of a revamp of the old phone than a completely new redesign using all the latest and greatest technology integrated with a brand new constellation and swanky new gateway technology.
It's also nice to see that a new constellation would take only $1 billion instead of $4 billion [the first one].
Suppose the new constellation lasts 10 years, that's $100 million a year. If done on borrowed money, that would be $200 million a year [interest and depreciation]. If there are 1 million subscribers, that would only be $200 per subscriber per year = $20 a month. Or $40 a month if there are only 500,000 subscribers.
There should be at least 10 billion minutes a year available from the new constellation, so that's about 1 billion minutes a month. With 1 million subscribers, that's 1000 minutes a month, which is about how much people use if minutes are free [from Leap Wireless usage data for example]. That's 2c a minute.
So the capital cost of a constellation is trivial compared with the value to subscribers.
It's a competitive system at that price. 1 million subscribers is not many. It's only 5 times existing subscribers.
What matters is the marketing ideas. That's the big question. Existing marketing has been somewhere between pathetic and poor. Cheap, cheap, cheap. That's what's needed. That means cheap minutes, so people can use them.
Yes, I am lining up my age-old rant about p-----g. It would be good to see the graph of subscribers and minutes used right there on globalstar.com
Mqurice |
