Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Tarken Winn who wrote (4453)	5/4/1999 2:07:00 PM
From: John Stichnoth	Respond to of 29987

It's scary, but I find myself agreeing with you more and more. :o) The Japanese model that successfully drove their export growth was to drive prices down as quickly as possible to the cost of driving their production lines full-out. That drove competitors out of the business, and gave them remarkable profits for a long time. In the case of G, the scarcity of spectrum makes that strategy work even better. Drive prices down as fast as they can build the handsets, then when minutes start to fill up start easing up prices and accelerate next-generation satellite development. Grab the available spectrum while it is still available. A problem seems to arise from the disjunction between the handset mfrs, G and the SP's. The SP's really don't have any substantial up-front or running costs, relative to their overall operations. Their costs are basically of the "opportunity" kind. And telcos are famous for ignoring those! The SP's are trying to keep their forward commitments as low as possible. Jeannette Cronin said that the telcos say they are not used to advertising very far in advance. That also seems to apply to their taking inventory (of handsets) as well. Why G* can't accelerate manufacture and deployment of the handsets, I do not understand. They're committed to paying for them anyway, and have so much poured into this ($3 bn) that accelerating by 6 months a critical payable that is only one-tenth of the total seems a no-brainer! Maybe that's what led to my earlier "assumption" error. It's so obvious!

To: Tarken Winn who wrote (4453)	5/4/1999 2:16:00 PM
From: Jeff Vayda	Read Replies (1) \| Respond to of 29987

Maurice: Does Tarken know you are using his account? (gg) Fine complain all you want about I* methods. We have seen the error in their ways. One of I* biggest errors, you still cling to - the handsets are too expensive. You claim to have G* problems all wrapped up, but you continue to push for expensive handsets. You have stated you believe the best way to do this is to have an on-line auction. This would tend to push the price up even further. How many people would come back after the first hours of auction after they see somebody with more money than sense is paying 2000 for a phone? It would scare off many a potential customer. In order for people to get on the system and using the minutes (where the real profits are) you need to reduce the barriers. Auctions will not do that for you. It might be a nice additional segment of the phone distribution strategy, but it should not be the only outlet for the phones. There are many people out there who do not enjoy your level of leisure. They are too busy doing what they do to be so well informed about the phones and such. They just walk into the local service provider and sign up. The phone they get is from the in-house stock that the service provider has. Once the get a phone, if they like the service they will upgrade to the same manufacturer when it comes time to buy another. Just human nature, when time is devoted to other pursuits. Get them hooked. Show them how much they use the system. Let them sign up for some minutes at a known price. More people would do that, and not use the minutes (thus we make money) than would sign up for the scary concept of "Current Price Is..." (Remember now, we SI'ers are not the average consumer.) Sure have a "Current Price Is" option for us smart folks, but let the huddled masses continue the way they are comfortable with - the way the service providers have experience in - the subsidized handset, buckets of minutes for a fixed price. Jeff Vayda

To: Tarken Winn who wrote (4453)	5/4/1999 9:03:00 PM
From: JGoren	Read Replies (4) \| Respond to of 29987

Maurice, let me respond with a thought. If G* priced its minutes too low at the beginning, it would have too many users and the customers would be disappointed by bad service. This occurred, to some extent, with the cell phone users; Sprint had a lot of bad-mouthing when it entered the mass market at lower prices. If the high-end folks buy and are happy, others will follow. I guess my thought is there is as big a danger in "overselling" the service and having disappointed users at the beginning while the company gets its act together from the customers' perspective. As long as G* is the low-cost service provider in its market, it should do well; prices will decline, I think, as the customer base enlarges. Indeed, phone customers have come to expect this; it would seem that you would like a marketing-pricing strategy that is counterintuitive to what the market has come to expect. One of the reasons, as previously stated, I believe Iridium is doing so poorly is that potential customers know that a better deal in handset prices and minute prices is soon to be available. [I am waiting to be blasted. :) ]