KPA-800 etc.

[Rudy Bakalov]

IMHO, taking the OEM route is Elecraft's best approach to meeting the demand for amplifiers and other products that are expensive to develop and bring to market.  Elecraft is a small company with very limited capital and resources and new, R&D intensive products are unlikely to be commercially viable.
Assuming that there are approximately 4,000 K3 manufactured to date, my guesstimate is that 25% of the owners will purchase an amplifier.  In other words, we are talking about 1,000 units at best; add another 100/year in future sales and the market size is still pretty small for a single-focus player.
Should Electraft take the OEM route, SPE may not be the best OEM vendor as they appear to be focused on the ham-radio market.  I would seek OEM arrangements with large manufacturers that do not depend much on amateur radio sales, such as Acom.
>From margins perspective, even small margins with no R&D cost are much better than still relatively small margins, but with a significant R&D cost.  It's all about economies of scale and economies of scale are not Elecraft's forte.
Speaking of R&D and OEM, I also think there are great opportunities to apply the OEM concept to the K3 itself.  For example, Alex VE3NEA (the guy who created CW Skimmer) has been working on a bleeding edge RTTY decoder that takes advantage of the power of modern DSP and CPU components; why not license his or any other kick-ass RTTY decoder to turn the K3 into the RTTY-er's choice?
Or how about opening the firmware so that anyone can write for the K3?  As brilliant the Elecrfat guys are, they are no match for the collective brain power of the community, not to mention their limited time.
So my bet is that we will continue seeing minor additions to the K3 product line due to limited resources and capital.
Rudy N2WQ
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[Phil LaMarche-2]

Rudy,

Great focused thoughts.

Phil


Philip LaMarche
LaMarche Enterprises, Inc.
www.instantgourmetspices.com

www.w9dvm.com
800-395-7795 pin 02
727-944-3226
FAX [phone]
NASFT 30210

K3  #1605

CCA 98  00827
W9DVM



-----Original Message-----
From: [hidden email]
[mailto:[hidden email]] On Behalf Of Rudy Bakalov
Sent: Monday, May 18, 2009 5:23 PM
To: [hidden email]
Subject: [Elecraft] KPA-800 etc.

IMHO, taking the OEM route is Elecraft's best approach to meeting the demand
for amplifiers and other products that are expensive to develop and bring to
market.  Elecraft is a small company with very limited capital and resources
and new, R&D intensive products are unlikely to be commercially viable.
Assuming that there are approximately 4,000 K3 manufactured to date, my
guesstimate is that 25% of the owners will purchase an amplifier.  In other
words, we are talking about 1,000 units at best; add another 100/year in
future sales and the market size is still pretty small for a single-focus
player.
Should Electraft take the OEM route, SPE may not be the best OEM vendor as
they appear to be focused on the ham-radio market.  I would seek OEM
arrangements with large manufacturers that do not depend much on amateur
radio sales, such as Acom.
>From margins perspective, even small margins with no R&D cost are much
better than still relatively small margins, but with a significant R&D cost.
 It's all about economies of scale and economies of scale are not Elecraft's
forte.
Speaking of R&D and OEM, I also think there are great opportunities to apply
the OEM concept to the K3 itself.  For example, Alex VE3NEA (the guy who
created CW Skimmer) has been working on a bleeding edge RTTY decoder that
takes advantage of the power of modern DSP and CPU components; why not
license his or any other kick-ass RTTY decoder to turn the K3 into the
RTTY-er's choice?
Or how about opening the firmware so that anyone can write for the K3?  As
brilliant the Elecrfat guys are, they are no match for the collective brain
power of the community, not to mention their limited time.
So my bet is that we will continue seeing minor additions to the K3 product
line due to limited resources and capital.
Rudy N2WQ
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[K7TV]

IMHO it seems that Elecraft has a unique formula for superior development
work at lradically lower cost (just look at what they have done with so few
people), and I don't think they want to bring that cost up to what other
companies are paying. Telling them what they are not able to do doesn't seem
like a good bet.

73,
Erik K7TV

----- Original Message -----
From: "Rudy Bakalov" <[hidden email]>
To: <[hidden email]>
Sent: Monday, May 18, 2009 2:23 PM
Subject: [Elecraft] KPA-800 etc.


IMHO, taking the OEM route is Elecraft's best approach to meeting the demand
for amplifiers and other products that are expensive to develop and bring to
market. Elecraft is a small company with very limited capital and resources
and new, R&D intensive products are unlikely to be commercially viable.


______________________________________________________________
Elecraft mailing list
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Help: http://mailman.qth.net/mmfaq.htm
Post: mailto:[hidden email]

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[Rudy Bakalov]

Erik,

I would imagine that all of us on this reflector are here because we do believe that Elecraft products are superior and of great value.  However, it is important to distinguish between price and cost as it is this difference (the margins) that fuel product development.
Let's assume for a moment that Elecraft sells about 1500 K3s per year for an average price of $3,500.  Let's also assume that the team makes a decent living in CA and each of the 4 members brings home about $125,000 per year.  Right there we have a fixed labor cost of $500,000 per year or about 10% of sales.  As you can see, not much is left if the overall company margins are in the 10-15% range, which is normal for low volume manufacturing..
Why do we care about all this?  We do because it is important to understand how our desires and demands for features, products, etc. impact the bottom line and, based on that impact, the likelihood of them happening.
So, do we want amps at the expense of superior core products performance?  Is there a unique amp feature that existing products do not meet and therefore there is an opportunity for Elecraft?  Can we live with an OEM product?  These are some of the questions that are important to consider and naturally the answers will be different for each of us on the reflector.
Elecraft is an amazing company that despite its size has truly changed the competitive landscape of the ham industry.
Rudy N2WQ
--- On Mon, 5/18/09, Erik N Basilier <[hidden email]> wrote:

From: Erik N Basilier <[hidden email]>
Subject: Re: [Elecraft] KPA-800 etc.
To: "Rudy Bakalov" <[hidden email]>, [hidden email]
Date: Monday, May 18, 2009, 5:59 PM

IMHO it seems that Elecraft has a unique formula for superior development work at lradically lower cost (just look at what they have done with so few people), and I don't think they want to bring that cost up to what other companies are paying. Telling them what they are not able to do doesn't seem like a good bet.

73,
Erik K7TV

----- Original Message ----- From: "Rudy Bakalov" <[hidden email]>
To: <[hidden email]>
Sent: Monday, May 18, 2009 2:23 PM
Subject: [Elecraft] KPA-800 etc.


IMHO, taking the OEM route is Elecraft's best approach to meeting the demand for amplifiers and other products that are expensive to develop and bring to market. Elecraft is a small company with very limited capital and resources and new, R&D intensive products are unlikely to be commercially viable..


______________________________________________________________
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[K7TV]

Rudy,

I think it is dangerous to reason based on assumptions about not only development costs but also overall margins and any other numbers that a company does not disclose. Making assumptions based on what is average simply doesn't account for the fact that every company is different from average. It is the kind of reasoning that the government engages in: destroying private enterprise by trying to replace the invisible hand with public beliefs.

That said, I think it is fair and useful to vent about what features are meaningful to oneself as a user, what one would buy or not buy etc. I don't think there is anybody out there who can speak for all or even for the majority of hams, and I think the Aptos folks want to know what we want at the individual level.

73,
Erik
  ----- Original Message -----
  From: Rudy Bakalov
  To: [hidden email] ; Erik N Basilier
  Sent: Monday, May 18, 2009 4:05 PM
  Subject: Re: [Elecraft] KPA-800 etc.


        Erik,

        I would imagine that all of us on this reflector are here because we do believe that Elecraft products are superior and of great value.  However, it is important to distinguish between price and cost as it is this difference (the margins) that fuel product development.


        Let's assume for a moment that Elecraft sells about 1500 K3s per year for an average price of $3,500.  Let's also assume that the team makes a decent living in CA and each of the 4 members brings home about $125,000 per year.  Right there we have a fixed labor cost of $500,000 per year or about 10% of sales.  As you can see, not much is left if the overall company margins are in the 10-15% range, which is normal for low volume manufacturing.


        Why do we care about all this?  We do because it is important to understand how our desires and demands for features, products, etc. impact the bottom line and, based on that impact, the likelihood of them happening..


        So, do we want amps at the expense of superior core products performance?  Is there a unique amp feature that existing products do not meet and therefore there is an opportunity for Elecraft?  Can we live with an OEM product?  These are some of the questions that are important to consider and naturally the answers will be different for each of us on the reflector.


        Elecraft is an amazing company that despite its size has truly changed the competitive landscape of the ham industry.


        Rudy N2WQ
        --- On Mon, 5/18/09, Erik N Basilier <[hidden email]> wrote:


          From: Erik N Basilier <[hidden email]>
          Subject: Re: [Elecraft] KPA-800 etc.
          To: "Rudy Bakalov" <[hidden email]>, [hidden email]
          Date: Monday, May 18, 2009, 5:59 PM


          IMHO it seems that Elecraft has a unique formula for superior development work at lradically lower cost (just look at what they have done with so few people), and I don't think they want to bring that cost up to what other companies are paying. Telling them what they are not able to do doesn't seem like a good bet.

          73,
          Erik K7TV

          ----- Original Message ----- From: "Rudy Bakalov" <[hidden email]>
          To: <[hidden email]>
          Sent: Monday, May 18, 2009 2:23 PM
          Subject: [Elecraft] KPA-800 etc.


          IMHO, taking the OEM route is Elecraft's best approach to meeting the demand for amplifiers and other products that are expensive to develop and bring to market. Elecraft is a small company with very limited capital and resources and new, R&D intensive products are unlikely to be commercially viable.


       
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