No, I'm not kidding. G* isn't a competitor to cellular or land lines. It is being sold by the cellular companies! My point is NOT that the price is competitive with landlines or cellular. It isn't. Instead, I was addressing the marketing issue. Remember things like "price elasticity", "utility", "clearing price"? G* wants to price their product to maximize revenue. Maurice has been offering a 5 cents price as a possibility, to fill up the available minutes as quickly as possible. And, in the wake of irid's failure to sell its phones and minutes, the question is clearly out there whether the proposed price is too high to generate any traffic.
Given the population without access to a phone (and that means they can't use their calling card, either), will enough of them buy the G* phones and start using them?
One way to answer that question is to look at the population's actions given similar pricing situations. One similar situation is people's use of long distance. The overall population's use of long distance shows reluctance, of course--they don't call overseas as much as they call locally. But they do call overseas a lot. Point is: A lot of people don't mind paying $2.00 per minute to make a telephone call, if they have a need to make the call.
So, now, take the population without access to a phone. Say, a Montana farmer who has been out plowing in his John Deere tractor all day. He's on the back 500 acres, out of range of any cell towers. He's ready for the seeders. If they don't get there on time he loses $2,000 per day. "Where are those lazy sons of bitches?", he mutters. He gets on his G* phone, and says, "Where the hell are you?" They're waiting for him in the wrong place. They get over to where they are supposed to be. The seed is planted on the first optimal day. He gets a great crop that is harvested ahead of his neighbors, and makes an extra 0.5 cents per pound, for 2 tons of wheat. His $2 phone call (per minute) has made him $2,000.
1. There are people out there without access to phones, either all day or part of a day.
2. Lots of people are willing to make phone calls at $2 per minute.
The only question therefore, once G* goes live, is the ramp-up time for getting those potential users to buy G* phones and start using them. |
