Mika, you say great technology means virtually nothing. You can't be serious. The world is made up of great technology. You got the next bit right, which is that great technology comes at a price and that price has to make customers think, 'Yayy, that's great. I'll take two!' Globalstar's minutes came at 7c a minute, plus the interconnection and transit fees.
As you probably know, fully terminated retail terrestrial wireless minutes are available at 10c a minute in the USA. Landline calls around the world can be made for 5c a minute. The actual cost of delivering a Globalstar call to most places on earth is less than 15c a minute. Do you really think that is too expensive for people who don't have other mobile phone services available? Many don't have landline available for that cost. Add on some profit and 40c a minute is how much Globalstar minutes could have been sold for and made a BIG profit for all involved in the delivery of the calls.
You say that for 20 years, satellite phone calls have been available. Well, sort of. As you pointed out, technology has a cost. Are you aware of the price for Inmarsat and other satellite services? Are you aware that the appliances used to make those calls are not mobile? They are not handheld phones. They are briefcase-sized. They cost $10s of thousands of dollars. They gave rotten call quality with a huge voice delay. They were not great quality. I am writing in short sentences so you get it.
Now, there are improving geostationary mobile phones, but they still have huge voice delay, which anyone I know finds really, really, annoying and disruptive to their conversations.
Your 'proofing point' [sic] doesn't prove anything. You admit they are not 'handsized' but then say neither is Globalstar's. People reading your comment would think they are both huge. Well, Globalstar's is actually hand-sized. It is the same size as Nokia's cheaper mobile phones of 1994, two of which this family bought. That's big compared with the cute little CDMA and other terrestrial phones now available, but it's still teeny compared with a briefcase.
You misunderstand the real problem which was not 'misguided investors'. The real problem which caused Globalstar's lack of sales was excessively greedy pricing by the service providers who thought they could sting people $3 a minute for a service which cost them 40c or 50c a minute to produce, as well as charging them a fortune for the phone and then a connection fee and then an absurdly high monthly charge as well. Of course there were very few people who would pay such absurd prices, even if they don't have other phone service available.
In the past few months the service providers have lowered prices from the stratosphere, but now people are leery of buying because they don't want to buy a phone from a company which might go broke. It is a day late and a dollar short. So now, Globalstar is stuck with dramatic action and financial losses to get the sytem in an acceptable financial state to attract subscribers.
The failure was moronic marketing by service providers and the mistake Globalstar made was to let moronic marketers loose on the system which caused investors to lose their money. Loose, lose, loose, lose, loose, lose.
If Globalstar had adopted Wacky Wireless pricing in the first place, they would now have 500,000 customers using billions of minutes. 'Wacky Wireless' is when you sell the minutes at really cheap prices so that it is simply the cheapest phone service around. You only raise the prices when the system starts to fill and a higher price is needed to stop the system becoming overloaded. It is how a new system, with zero marginal costs for another minute from that system, can maximize their net present value.
That is a very, very simple concept, but it seems difficult for people to understand how it would work and why it would maximize profits for all concerned and give consumers a great bargain and great service which they would not otherwise enjoy. It also gives the supplier a powerful competitive position. I bet you can't understand it. Am I right?
The usual mistake people make is to start expensive and work their way down. Iridium did it, right into the ground [almost literally except for an 11th hour rescue by the USA military]. That's the RIGHT way to sell new products which cost something to produce. For example television sets, calculators, refrigerators, cars, mobile phones and yes, Globalstar phones. It's important to differentiate between the phone and the minute.
That's another thing which Globalstar mucked up and most people in SI made the same mistake. They thought the phones needed to be lowered in price. WRONG! It was the minutes which needed to be sold cheaply because they were the thing which was in huge oversupply with zero cost for a subscriber to use another one. The phones cost a LOT to produce each one and because supply is limited, they should go first to the rich people who would be prepared to pay $2000 to get a great service with nearly free minutes [or free minutes after, say, $100 a month of calls]. Then, after the wealthy have had first bite at the cherry, the phone prices would be lowered to bring more people into the buying fold. Nokia does this brilliantly with their phones - start at the high end, then run them down the line until they fall off the bottom. So simple yet Globalstar and others get it wrong.
That is another concept which people have a lot of trouble understanding. So, if you have trouble with it, you will be in good company.
You are wrong, it's not over. We should not let it rest in peace [whatever that means]. There are 10s of millions of people who would like to have the service at a price which Globalstar can provide that service.
You are not being flamed as anti-this or anti-that. But your silly review giving false ideas needed comment. "Hoping to sign up a San Diego customer" is a bit like Globalstar hoped to sign up all those people at absurdly high prices. Wishful thinking is not a good way to succeed in sales. Let me know how you get on with that particular customer next week. I bet you don't make the sale - it just sounds a bit wishy washy to me.
Since you can't understand Globalstar, I suspect you will fail to understand a lot of other things too. [Well, you did call we Globalstar investors blinkered, misguided, have no idea, know little, and said we over-hyped and didn't get it, so you'll have to forgive a personal comment or two in return].
L M Ericsson bought Orbitel in 1996 and thereby became involved with CDMA and Globalstar because Orbitel was licensed to produce dual mode Globalstar handsets using GSM as the terrestrial service. It was amusing when the chief slimeball hagfish [Ericy] bought Orbitel and thus into CDMA, because at the time, Bill Frezza, in the pay of Ericy, was denying that CDMA would work [due to failing under load, blah, blah, blah] and Ericy was fighting tooth and nail to deny CDMA was of any use in mobile phones.
But now, it serves L M Ericsson's interests to have CDMA and Globalstar succeed because their other mobile handset business is pathetic and if Globalstar succeeds, they will be one of three Globalstar handset makers, which is a very, very good opportunity to get a high market share, which Ericsson will never see in the terrestrial handset business.
In 2010, there could be 10 million subscriber devices a year being produced for Globalstar customers. If Globalstar goes belly up, Ericy will lose their privileged position with the current company and QUALCOMM. If you think that's a desirable outcome, you don't understand where Ericy's interests lie.
By 2010 there could be 3 or 4 Globalstar constellations with total earth coverage, providing fast internet access and high quality voice through 'beam me up Scotty'-sized devices. As you point out, that needs to be at a low price to attract people. The next constellation could wholesale at about 2c a minute. Do you think that's cheap enough to attract people with no other phone service? Terminating calls in 5 years will be really, really cheap. So the retail price could be 5c or 10c a minute.
There, now I feel better too.
Mqurice
PS: You also got it wrong that your post was OT. Globalstar is very much On Topic for Ericy. It could turn out to be their best opportunity. If they weren't asleep at the wheel, they might deign to kick in a bunch of money in exchange for improved licensing terms on the phones, data, some shares in GlobalstarLP and for Vodafone [and other service providers] to have the thumbscrews applied.
You can come here if you like, where we are talking about you and your misunderstandings ... Message 15212702 |
