DEMAND AND DEMOGRAPHICS - An Inquiry on Business Plans: A serious criticism of Iridium, expressed quite a long time ago by an analyst I've spent some time discussing the MSS industry with, was that while the company professed to have done enormous demographic research into the potential market for their product, they would not provide the actual study for perusal. The existence of the study is not in doubt, but the reasons for withholding it certainly beg a number of questions. But even assuming the massive amount of work done to procure this information, one wonders how the conclusions it provided (which led to the business plan adopted by Iridium) could have proved so incorrect (and one must assume they were incorrect, given the current lack of subscribers).
Why am I bringing this up, particularly on the Globalstar board? For one thing, I believe the statement that "3 billion people have never made a telephone call" is not a sufficient demographic study, nor does it establish demand. The business traveller market, not at all demonstrated to be large by Iridium, is not the issue; Globalstar's market, if I understand the service, will be primarily to "underserved or unserved" telephony markets. These markets, by definition, are economically less developed than the markets now amply served by cellular. Thus, one might question how they will afford a satellite service.
It would be easy to say that the local telecom companies in the "underserved and unserved" markets will subsidize the installation of satellite equipment, and the per-minute cost of its use. This, of course, will cut into the profit margin these companies will realize from the service, perhaps "dis-incentivizing" their financial commitment to the added cost (once installation is complete)of marketing the service.
Additionally, if the local telecoms are charged with marketing the Globalstar service, it seems likely (given their economically less-developed status) that they have little marketing experience. Who will teach them how to sell this product? Will Airtouch or Vodaphone be responsible?
My question - and I apologize for dropping in on this board seemingly out of nowhere (I've actually been reading it for many months) - is: Has anyone seen an actual Globalstar business plan/demographic survey, and marketing plan, among the readers of this board? If so, could you provide some "fleshing-out" of the "3 billion people...etc." argument, as it applies to the Globalstar model? Specific business plan/marketing strategy information might be of interest to all. It seems too much of a stretch to think Airtouch and Vodaphone will carry the entire load, and LDC country telecoms don't seem likely to have the requisite experience to "load the system".
Thank you very much.
Joe Brown |
