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Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT -- Ignore unavailable to you. Want to Upgrade?

To: Pierre who wrote (24402)	11/9/2001 3:17:08 PM
From: Maurice Winn	Respond to of 29986

Pierre, Vodafone Australia did combine the two in advertising in a switch and bait tactic. They advertized Vodafone as having total Australian coverage. Then, when somebody enquired, they were told about Globalstar but were sold a normal terrestrial phone which, while not 100% coverage, was claimed to be very good for what the person needed. Vodafone didn't even have the Globalstar phone upfront on display - people had to ask for it, though perhaps they changed that 'hide it out the back' strategy. They didn't seriously try to sell the service. They never even offered a QUALCOMM phone and the Ericy and Telit phones were $$thousands, and so were the minutes... No wonder they sold few. It's still a great service, not being sold in the right way. The right way means really cheap minutes and phones sold at auction for what the market will bear [which, I guess, would be in the $1,200 range if the minutes were cheap enough]. As you can see here on ebay, search.ebay.com the phones are not worth much because the minutes are so expensive that people can't justify paying much for a phone. Because the phones are so cheap, it's not in QUALCOMM's interests to manufacture them, so the system will die unless the minutes are made cheap enough for the phone prices to go high enough to get QUALCOMM excited about making them because demand for phones and prices of phones are high enough for them to make some money. It's a share-bargaining position and the price of the phones proves that the Globalstar minute marketers are too greedy. If the phones were $3000 on ebay, I'd say the minute marketers were giving away the minutes too cheaply [probably, though it's possible that's the right price until the system is loaded - maybe even more]. This seems very simple to me, but it must be hard for other people to understand for some reason. Dell sells via internet. Phones could sell like that at auction. Cheap things sell a LOT [look how popular oxygen and CO2 are]! Revenue = volume x price. High minute prices can't make big revenue because volume stays low [people are poor]. Revenue is nearly all profit in a fully-loaded system. That's because it's a capital-intensive fixed-cost business. Things in short supply [phones] sell at higher prices. Things in oversupply [minutes] sell at low prices. These things are like laws of physics - they can't be changed by marketing flim flam, even if the flim-flammer has an MBA and memorized a lot of stuff to pass exams. Maybe the mere mention of physics flummoxes marketers and these things are not simple or obviously laws of the universe to them. "Buy a cellphone that works everywhere and costs $900 and minutes are $2" does mean something in Brazil. It means that the people selling the service are from another planet. Things can only sell for the hourly rate of people who want to buy the service. Yes, urgent or important calls will be made at high prices, but only one of those a month. To get people yakking, the prices must match their hourly rates and preferably be cheaper. A $100 an hour lawyer won't pay $1000 an hour to yak. But will pay $60 an hour [$1 minute] to yak, [but would prefer to pay only $20 to enjoy a big consumer surplus]. A $1 a day subsistence farmer will pay 10c an hour to yak, [but would prefer to pay only 2c an hour to enjoy a big consumer surplus]. They won't pay $20 an hour. A $10 an hour ordinary human will pay $6 an hour to fill in time yakking to friends [that's only 10c a minute]. And so it goes. To get 5 million subscribers yakking, it is obvious that there are not enough $100 an hour lawyers and doctors etc to fill the system and make money. Even at $1 a minute, lawyers and doctors etc might not want to bother with a big phone, with a flat battery, which costs a lot of money to buy. To sell Globalstar, the service has to be really cheap, which means in the yakking range for ordinary humans so that they get a decent consumer surplus [= a good bargain]. Mqurice