The Rotten Tomato Model is:
Make the handsets cheap, make the minutes expensive, decrease the minutes price to wholesalers as they increase volume, build the gateways slowly, increase handset production slowly, tempt the competitors ICO and Ellipso to think the minutes will be high priced.
Incidentally, 'vertical markets' is MBA marketing jargon for forestry and oil industries, trees growing straight up, and oil wells which go straight down. Horizontal markets are ones such as 'Swiss Cheese' filling where people travel horizontally and run out of service, and exotic holiday destinations where people lie prone on the beach. Vertical markets for tourism are where people gawp at the Eiffel Tower and Russians and Kiwis stand with tired legs in queues at Disneyland.
The Globalstar plan looks like the Iridium model of not selling many minutes and making them excessively expensive, while keeping handset production down and gateways in warehouses until demand has grown [horizontally?] enough.
Thank goodness for great technical designers who have given a bad marketing plan a chance to succeed in achieving a profit by building a system which is producing as we 'speak' cheap, high quality minutes.
A better plan would be cheap minutes to start, increasing the price as demand builds. Make handsets expensive to start, which would give incentive to boost handset production very, very quickly and avoid 'waiting lists' for them. The high demand would give incentive to gateway operators to get in quickly so that that get a share of the business before all the customers are living around other gateways which offer a better deal. This would see off the competition before they double or triple the number of minutes to sell, which will slash the price of minutes to levels they won't like for their poor quality minutes. Gateway operators are competing with each other for the minutes - if one of them doesn't sell the minutes, another one will and in about 3 years, they'll be trying to sell minutes when the price is rising and that is not a good strategy to be a successful gateway operator.
Oh well, my entry cost of $3 should work out fine, even with the rotten tomato plan. I had thought of swinging some free cash flow [that's marketing jargon for Wheeeeeee!!!!] from the big stock price increase at Mighty Q! to Globalstar, but maybe I'll use it to short Globalstar instead. I really dislike the taste of rotten tomatoes.
Maurice |
