*p-----g* Now this is getting some airtime! About time too. The fantasy of huge numbers of subscribers waiting with bated breath to hurl their blank cheques in the direction of Iridium and Globalstar is well and truly buried now.
Readware took off when the going got tough. Now his theory that they knew what they were doing and silly people shouldn't ask questions and if they do they don't deserve answers is looking a little on the tenuous side.
So, I'll allow myself a gloat in his direction while expressing appreciation for all the information and analysis he provided. Investment is a dangerous game and leaving it to the experts to pat one on the head and say 'run along and leave it all to us' is shown to be unwise.
I'd say the marketing plans for Iridium and Globalstar are getting a thorough thrashing right now with cheaper minutes on the menu. Luckily for Globalstar, they have heaps of minutes available at such cheap prices that they can carve all they want out from the terrestrial market on an 'introductory special' basis. Millions of people will want a dual mode Globalstar handset so they can still use it in the terrestrial dead spots, which are still all over the place.
Meanwhile, listen to this nonsense jargon:
"World Phone retail (currently at 1.50 to 2.00/minute) will set the price point."
No it won't. Demand will set the "price point" for both the handsets and minutes whether Globalstar or Iridium managers like it or not. All the handset suppliers and minute sellers can do is reduce their total profit by messing with the demand by overpricing or underpricing minutes or handsets or both. Their job is to fill the system fast by creating competitive demand - the system is built, now sell it to the highest bidder. Don't tell subscribers what the price should be.
Whatever price is now quoted by competitors is irrelevant to what price will be charged by Globalstar in the beginning of 2000 when a lot will be different. No doubt some hot shot MBA marketer will trot out the dreaded phrase 'price destruction' as though a cheap introductory rate will stop people using the Globalstar service when the price rises as demand builds. They are wrong because the demand building is why the price rises. Having a cheap price won't frighten subscribers away. They'll use the best and cheapest system available. That will be Globalstar out of terrestrial cellular coverage.
Globalstar minute prices should be demand based, not competitor pricing based. We should just make the minutes really cheap so the handset producers are going flat out 24 hours a day 7 days a week selling handsets at a huge profit. When the system is filled, in a year or maybe 14 months, the price can be pushed up so that demand and supply balance out in minutes and handsets. Constellation2 at lower altitude can then be fired up. Then Constellation3. Then 4,5 and 6 at higher and lower altitudes.
By the time Constellation2 is filling, minutes and handset prices should be smooth, low and hugely profitable. Competitors will be splattered over the landscape, with new networks cancelled. Minutes will be sold on various marketing plans, with spot pricing, or "Current Price is ..." plans to keep demand stable with the system always able to take a new call. No such thing as a busy signal! But the system is always full.
Ah, I love it. The dream is coming true.
So funny that people are ditching Globalstar shares too.
Oh well, life's a giggle,
Maurice
PS: Good suggestion on the subcutaneous chip Pierre. $10 per person would mean $2bn profit just from the USA.
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