I suggest we're ingnoring or underestimating several factors in the preceding myriad of posts on how many handsets should be ordered and how fast:
1. Lead time for the handsets
2. Risk of obsolesence
3. Opportunity to optimize design based on market experience
4. Customer support/training requirements
From the time value of money point of view, all us s/h would love to see instant deployment of 7M handsets, fully loading the system at an optimized price per minute. In an imperfect world, a compromise had to be made that recognized a normal ramp up time for a new product and allow for tinkering of phone designs, pricing plans and etc, while still providing timely cash flow. I don't think it's an accident that the number of handsets G* initially ordered is essentially the number it needs in use to reach cash breakeven. I think it recognizes that there aren't enough marketing people in the world to sell all those handsets instantly...it will take time to teach the initial customers (and to learn from them what features are most attractive and what doesn't work quite right). The handset designs that are eventually sold in millions will probably differ from what's available now in ways that are hard to foresee.
It looks to me like the initial order of 300K user terminals won't be finished until 3/00. Ericson, at least, has a three month lead time from start of production to product delivery. So, I expect after one or two months of marketing experience, that is, say 12/99, phone orders from the retailers will come forward.
Without wanting to sound like a cheerleader for mgmt, I think they are doing this rollout in a reasonable, measured way. The unsold minutes in the early months are a foregone profit, it's true, but count less than the money spent on UTs that might not be what customers want, or are found to have problems. |
