On the advisability of selling kit radios

[Conway Yee]

The threads about a kit amplifier got me thinking.

It is now 1999.  The market is saturated with well established companies
such as Yaesu, Icom and Kenwood selling high quality radios.  Ham radio
technology is stagnant with no major leaps in the horizon.  The average
amateur is aging rapidly with very little influx of new blood.  The youth
are all interested in computers and the internet.  The days of Heathkit
are long past; there is no way to save money building kit electronics.
The only kit manufacturers sell small inexpensive radios that can be
built in a few hours.

Certainly there is no good reason to start a company selling a 100 Watt
kit SSB/CW rig....OTOH Elecraft bet it could and it would appear that they
are successful.

It is now 2010.  The same arguments are being put forward for an solid
state HF amplifier.  In addition, the legal liability of high current
electronics is daunting.  The population of customers of amplifiers is
even smaller than that for 100 Watt kits.  Are these arguments
correct?  I don't know but suspect that there would be a niche market
for such kits as long as the manufacturer has no business presence in the
US.

Hopefully such a kit starts getting sold in the next few years.  It
sounds like fun.

tnx.
Conway Yee, N2JWQ

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[Phil Hystad]

I learned a little new thing about Toyota marketing just this week.  Toyota of course has been
in the news lately with the massive recalls.  It was reported that the Toyota Prius Hybrid
is subsidized by about $2500 to $3000 by Toyota.  That is, the Prius whole sale price to
the dealers is a few thousand dollars less then it costs to build.  Every Prius car sold is a money
loser for Toyota!

Toyota is happy with this though (they said so) because it is their front-line product.
It is the product that gives them name recognition, the product that brings them
Kudos for high-tech achievements, and the product that brings customers through
their doors.

Thus, a company does not need to make money on a given product to justify its
production and sale -- there are other reasons to build products.

A smart company will choose the profit margin for each product individually.  It is
rare for all products to be treated the same.  Some will bring in a margin of 40%,
others only 5%, and then maybe others, by plan, minus 10%.

The Elecraft K3 may have a 30 % margin and maybe the K2, being in production
for so long is now about 50 % margin.  But, a new solid-state amp may only be
5% or 7% -- enough to make their customers happy without losing money but not
earning money like a K3 or a K2 either.

phil, K7PEH


On Feb 8, 2010, at 9:57 PM, Conway Yee wrote:

> The threads about a kit amplifier got me thinking.
>
> It is now 1999.  The market is saturated with well established companies
> such as Yaesu, Icom and Kenwood selling high quality radios.  Ham radio
> technology is stagnant with no major leaps in the horizon.  The average
> amateur is aging rapidly with very little influx of new blood.  The youth
> are all interested in computers and the internet.  The days of Heathkit
> are long past; there is no way to save money building kit electronics.
> The only kit manufacturers sell small inexpensive radios that can be
> built in a few hours.
>
> Certainly there is no good reason to start a company selling a 100 Watt
> kit SSB/CW rig....OTOH Elecraft bet it could and it would appear that they
> are successful.
>
> It is now 2010.  The same arguments are being put forward for an solid
> state HF amplifier.  In addition, the legal liability of high current
> electronics is daunting.  The population of customers of amplifiers is
> even smaller than that for 100 Watt kits.  Are these arguments
> correct?  I don't know but suspect that there would be a niche market
> for such kits as long as the manufacturer has no business presence in the
> US.
>
> Hopefully such a kit starts getting sold in the next few years.  It
> sounds like fun.
>
> tnx.
> Conway Yee, N2JWQ
>
> ______________________________________________________________
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[Johnny Siu]

Hi Conway,

Through out the years with Elecraft, I feel they are successful in identifying a small but loyal market segment of customers.

As you have been aware, ham population is shrinking.  My boy has no interest to play my whole list of radios though he got his ham ticket at the age of 16.  Similar to you, I would wonder how long a pure ham radio manufacturer could survive.  My comment on this has no regard to how long Elecraft will stay in its pure ham radio manufacturing.

Within my limited knowledge of the radio industry, Icom earned most its business profit from insitutional contracts and business.  Part of the knowledge and expertise gained from those contracts has been used in their ham radios.  In other words,  ham radio now becomes a 'by-product' of their successful insitutional contracts.

I truly hope that Elecraft will stay in its current business and give the ham population an unique choice of products.

73

Johnny VR2XMC



----- 郵件原件 ----
寄件人﹕ Conway Yee <[hidden email]>
收件人﹕ [hidden email]
傳送日期﹕ 2010/2/9 (二) 1:57:16 PM
主題： [Elecraft] On the advisability of selling kit radios

The threads about a kit amplifier got me thinking.

It is now 1999.  The market is saturated with well established companies
such as Yaesu, Icom and Kenwood selling high quality radios.  Ham radio
technology is stagnant with no major leaps in the horizon.  The average
amateur is aging rapidly with very little influx of new blood.  The youth
are all interested in computers and the internet.  The days of Heathkit
are long past; there is no way to save money building kit electronics.
The only kit manufacturers sell small inexpensive radios that can be
built in a few hours.

Certainly there is no good reason to start a company selling a 100 Watt
kit SSB/CW rig....OTOH Elecraft bet it could and it would appear that they
are successful.

It is now 2010.  The same arguments are being put forward for an solid
state HF amplifier.  In addition, the legal liability of high current
electronics is daunting.  The population of customers of amplifiers is
even smaller than that for 100 Watt kits.  Are these arguments
correct?  I don't know but suspect that there would be a niche market
for such kits as long as the manufacturer has no business presence in the
US.

Hopefully such a kit starts getting sold in the next few years.  It
sounds like fun.

tnx.
Conway Yee, N2JWQ

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[David Gilbert]

That's pretty silly when you consider that any amplifier will take (or maybe has already taken) a LOT of development work, likely incur a lot of tooling expenses, and would provide very little pull-through for their other products (which already sell very well on their own).  If they don't price it realistically it would at best be one of those situations where somebody advertises a product but hopes nobody buys one.

If you were running your own small business and trying to figure out where to invest your time and your money, would you make that decision?  I sincerely doubt it.  It's one thing for a heavily-capitalized company like Toyota to market a loss leader product for the sake of image and long term market share ... it is quite a different matter for a smaller one.

If Elecraft can introduce a nifty power amplifier and sell it for a decent profit, more power to them.  Expecting them to sell you a multi-$K item for no financial return is simply fanciful.

Dave   AB7E



------Original Mail------
From: "Phil Hystad" <[hidden email]>
To: "Conway Yee" <[hidden email]>,
    <[hidden email]>
Sent: Mon, 8 Feb 2010 22:20:38 -0800
Subject: Re: [Elecraft] On the advisability of selling kit radios


The Elecraft K3 may have a 30 % margin and maybe the K2, being in production
for so long is now about 50 % margin.  But, a new solid-state amp may only be
5% or 7% -- enough to make their customers happy without losing money but not
earning money like a K3 or a K2 either.

phil, K7PEH


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[juergen piezo]

Hi Johnny

Elecraft  could become a killer company if it was very aggressive.

Products that I think would be a huge success if Elecraft put their name behind them would be these.

A SDR receiver like the SDR-IQ/QSR1/Perseus with  better interfacing for ham radio use. Besides hams low band AM band  DX'ers are huge in numbers. Their numbers alone would justify Elecraft producing a SDR.

A SDR transmitter, Phil Covington  and HPSDR are just too small  to bring these products to the market in a realistic time frame. The curiosity factor is now not in the 3rd quarter  of 2013! Who wants to waste money on experimental products that are not supported by people like TAPR? Not me!

A fully direct sampling transceiver like the ADAT from Elecraft would be fantastic. While contestors  are an important group for high performance radios, their demand is minuscule compared to the general ham population who just likes playing around. Ultimate receiver specifications dont always factor into most hams purchasing decisions. If you want clues for this look at the Softrock Yahoo group, 6000 members! What other ham radio group has this number of members?

All the big players are missing the boat, anyone who takes on this SDR market like now will dominate ham radio manufacturer into the future. Its a momentum that cant be stopped. The K3 is bordering on obsolete probably within 2 years with the fast march of SDR transceiver technology.

Products like the Flexradio are great, however they just dont get the point that people dont want to boot a PC for ham radio use. If Flexradio had some kind of embedded front panel for the Flex5000 it would be a huge hit.

Variations of the K3 product would be a good start. A K3 with a single receiver and 200 watts. Why not build the P3 into this single receiver K3 with a power supply? It certainly would give most of the Icom lovers something to think about. Why bother with kits? Just mass produce the whole product in Mexico or wherever, it will sell.

Why not produce a K3 version of the Orion? The Orion languishes  with poor firmware development. Elecraft should strike and recruit the dissatisfied Orion owners.

The new Yaesu FT5000 despite its crippled second receiver is going to be a huge seller. While many in here whine endlessly on how bad knobs are, if the market wants knobs and a bigger box give it to them. The business world is littered with the carcasses of businesses  who  thought that they were right by trying to force feed the market with a product that the market did not like. Technical superiority  is not always important.

While many people scorn MFJ, MFJ has the right attitude because it identifies new ideas and opportunities and gets them to the market place fast. They are successful because of their ability to bring their products to the market place very fast. I have been burnt by MFJ, however some of their new products like the Intellituners are superbly engineered products that are just as good as Palstars Auto tuner in quality. Just examine MFJ's PCB;'s its not "junk" Why does not Elecraft produce a tuner like MFJ's 1.5kw Intellituner?

With so much interest in balanced feeders/tuners, 43ft verticals and remote tuners on every ham radio forum every second day, I am surprised that non of the big players have woken up to this perceived need.  I have seen more cries for a legal limit  remote tuner than I have seen for 100 Db IMD dynamic range receivers on ham radio forums.

The only problem that I see here on the Elecraft list is that many people want to force feed you a bread and water diet for your ham radio enjoyment. This bread and water diet with the overemphasis on receiver specifications wont win you  a big slice of the ham radio market by itself. You really need to fire up peoples imaginations with ideas, new concepts and products. Elecraft could easily occupy the technical moral high ground if it set out to do so with decent products.

Another product could be a Autotune HF tube amplifier like the Acom. If solid state is way too hard, tubes would be a good alternative. This amplifier  would use a single 8877 or 3CPX800's. With Elecrafts name on this product it would be a huge hit. Who can argue with Acoms success? A kit autotune HF amplifier could also be possible.  You could have this kit with and without auto-tune

I would be willing to put my money where my mouth is and pay deposits for some of the products  that I have mentioned. All I can say is that Elecraft should not be shy. It should email its customer base directly and ask them directly what products they would like.

One thing that I will finally say is that Elecraft should stick to producing the best possible products. The ham market is flooded with junk products that dont really perform the way they should.  Its heartening to see products like Acom, N8LP Wattmeter, Microham and W5BIG  all who produce basically technically perfect products.  This should be Elecrafts aim, not just be another kit company.

John
 



--- On Mon, 2/8/10, Johnny Siu <[hidden email]> wrote:

> From: Johnny Siu <[hidden email]>
> Subject: [Elecraft] Re：  On the advisability of selling kit radios
> To: "Conway Yee" <[hidden email]>
> Cc: "Elecraft" <[hidden email]>
> Date: Monday, February 8, 2010, 11:17 PM
> Hi Conway,
>
> Through out the years with Elecraft, I feel they are
> successful in identifying a small but loyal market segment
> of customers.
>
> As you have been aware, ham population is shrinking.  My
> boy has no interest to play my whole list of radios though
> he got his ham ticket at the age of 16.  Similar to you, I
> would wonder how long a pure ham radio manufacturer could
> survive.  My comment on this has no regard to how long
> Elecraft will stay in its pure ham radio manufacturing.
>
> Within my limited knowledge of the radio industry, Icom
> earned most its business profit from insitutional contracts
> and business.  Part of the knowledge and expertise gained
> from those contracts has been used in their ham radios.  In
> other words,  ham radio now becomes a 'by-product' of their
> successful insitutional contracts.
>
> I truly hope that Elecraft will stay in its current
> business and give the ham population an unique choice of
> products.
>
> 73
>
> Johnny VR2XMC
>
>
>
> ----- 郵件原件 ----
> 寄件人﹕ Conway Yee <[hidden email]>
> 收件人﹕ [hidden email]
> 傳送日期﹕ 2010/2/9 (二) 1:57:16 PM
> 主題： [Elecraft] On the advisability of selling kit
> radios
>
> The threads about a kit amplifier got me thinking.
>
> It is now 1999.  The market is saturated with well
> established companies
> such as Yaesu, Icom and Kenwood selling high quality
> radios.  Ham radio
> technology is stagnant with no major leaps in the
> horizon.  The average
> amateur is aging rapidly with very little influx of new
> blood.  The youth
> are all interested in computers and the internet.  The
> days of Heathkit
> are long past; there is no way to save money building kit
> electronics.
> The only kit manufacturers sell small inexpensive radios
> that can be
> built in a few hours.
>
> Certainly there is no good reason to start a company
> selling a 100 Watt
> kit SSB/CW rig....OTOH Elecraft bet it could and it would
> appear that they
> are successful.
>
> It is now 2010.  The same arguments are being put forward
> for an solid
> state HF amplifier.  In addition, the legal liability of
> high current
> electronics is daunting.  The population of customers of
> amplifiers is
> even smaller than that for 100 Watt kits.  Are these
> arguments
> correct?  I don't know but suspect that there would be a
> niche market
> for such kits as long as the manufacturer has no business
> presence in the
> US.
>
> Hopefully such a kit starts getting sold in the next few
> years.  It
> sounds like fun.
>
> tnx.
> Conway Yee, N2JWQ
>
> ______________________________________________________________
> Elecraft mailing list
> Home: http://mailman.qth.net/mailman/listinfo/elecraft
> Help: http://mailman.qth.net/mmfaq.htm
> Post: mailto:[hidden email]
>
> This list hosted by: http://www.qsl.net
> Please help support this email list: http://www.qsl.net/donate.html
>
>
> _______________________________________
>  YM - 離線訊息
>
> 就算你沒有上網，你的朋友仍可以留下訊息給你，當你上網時就能立即看到，任何說話都冇走失。
>  http://messenger.yahoo.com.hk
>
> ______________________________________________________________
> Elecraft mailing list
> Home: http://mailman.qth.net/mailman/listinfo/elecraft
> Help: http://mailman.qth.net/mmfaq.htm
> Post: mailto:[hidden email]
>
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[pd0psb]

Ah, you mean a BIG company, with a large R&D department, large amount of staff; 18 Lyles, 32 Waynes, 65 Katies,  lots of bureaucracy, too many products and costumers to give adequate attention to ?

One thing I agree upon: Direct Sampling SDR (in two-way form) is very soon going to be the most common HF technology, but please....with knobs and without Windows! :-)

73'
Paul
PD0PSB

[Julian, G4ILO]

pd0psb wrote

One thing I agree upon: Direct Sampling SDR (in two-way form) is very soon going to be the most common HF technology, but please....with knobs and without Windows! :-)

You mean, like the ADAT? http://www.adat.ch/

[pd0psb]

Yes Julian, though I don't think I like its "hospital-look" :-)

I'm quite sure all companies are breeding on a DS SDR TRX right now, besides the high specs achievable  it is also very cost-efficient technology.

73'
Paul
PD0PSB

2010/2/9 Julian, G4ILO [via Elecraft] <[hidden email]>

pd0psb wrote:

One thing I agree upon: Direct Sampling SDR (in two-way form) is very soon going to be the most common HF technology, but please....with knobs and without Windows! :-)

You mean, like the ADAT? http://www.adat.ch/

Julian, G4ILO. K2 #392  K3 #222.
* G4ILO's Shack - http://www.g4ilo.com
* KComm - http://www.g4ilo.com/kcomm.html
* KTune - http://www.g4ilo.com/ktune.html

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[n7ws]

--- On Tue, 2/9/10, pd0psb <[hidden email]> wrote:

Yes Julian, though I don't think I like its "hospital-look" :-)

Looks alright to me, but it needs about a 4 or 5 dB reduction in price.  This all digital stuff is supposed to be less expensive, not more.


I'm quite sure all companies are breeding on a DS SDR TRX right now, besides
the high specs achievable  it is also very cost-efficient technology.

73'
Paul
PD0PSB

2010/2/9 Julian, G4ILO [via Elecraft] <
[hidden email]<ml-node%[hidden email]>
>

>  pd0psb wrote:
> One thing I agree upon: Direct Sampling SDR (in two-way form) is very soon
> going to be the most common HF technology, but please....with knobs and
> without Windows! :-)
>
> You mean, like the ADAT? http://www.adat.ch/
> Julian, G4ILO. K2 #392  K3 #222.
> * G4ILO's Shack - http://www.g4ilo.com
> * KComm - http://www.g4ilo.com/kcomm.html
> * KTune - http://www.g4ilo.com/ktune.html
>
>
> ------------------------------
>  View message @
> http://n2.nabble.com/On-the-advisability-of-selling-kit-radios-tp4539424p4540449.html
> To unsubscribe from Re: Re： On the advisability of selling kit radios, click
> here< (link removed) =>.
>
>
>

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[pd0psb]

>Looks alright to me, but it needs about a 4 or 5 dB reduction in price.  This all digital stuff is supposed to be less expensive, not more.

Correct, but only after developping, testing, federal allowance&tests, patenting, marketing, sourcing sufficient part amounts, future component predictions, programming, bug testing, refining and quite a lot more I guess....

73'
Paul
PD0PSB

[Mike Reublin]

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[Terry Schieler]

It's known as a "loss leader" Phil.  Been around in retail marketing for
years.  Advertise Pepsi at an unbelievably low price hoping to draw
customers into the store that might just pick up some Doritos or other
products in that aisle at a decent enough profit margin to keep the bottom
line in the black on average.  And, it works!

73,

Terry, W0FM
K3 474

-----Original Message-----
From: Phil Hystad [mailto:[hidden email]]
Sent: Tuesday, February 09, 2010 12:21 AM
To: Conway Yee
Cc: [hidden email]
Subject: Re: [Elecraft] On the advisability of selling kit radios

I learned a little new thing about Toyota marketing just this week.  Toyota
of course has been
in the news lately with the massive recalls.  It was reported that the
Toyota Prius Hybrid
is subsidized by about $2500 to $3000 by Toyota.  That is, the Prius whole
sale price to
the dealers is a few thousand dollars less then it costs to build.  Every
Prius car sold is a money
loser for Toyota!

Toyota is happy with this though (they said so) because it is their
front-line product.
It is the product that gives them name recognition, the product that brings
them
Kudos for high-tech achievements, and the product that brings customers
through
their doors.

Thus, a company does not need to make money on a given product to justify
its
production and sale -- there are other reasons to build products.

A smart company will choose the profit margin for each product individually.
It is
rare for all products to be treated the same.  Some will bring in a margin
of 40%,
others only 5%, and then maybe others, by plan, minus 10%.

The Elecraft K3 may have a 30 % margin and maybe the K2, being in production
for so long is now about 50 % margin.  But, a new solid-state amp may only
be
5% or 7% -- enough to make their customers happy without losing money but
not
earning money like a K3 or a K2 either.

phil, K7PEH



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[lstavenhagen]

JMO,

There're only a limited number of improvements you can make to a mouse trap before you start getting diminishing returns. For the task of bouncing HF sigs off the ionosphere, at some point more and more technology on that isn't going to lead to any improvement.
It's sort of like high technology being applied to, say, archery equipment. In the end all you need is a stick with a string on it to do the job and there's only so many ways to improve a stick and a string. After that you have to resort to gimmicks to sell the new/improved ones and you're not really getting too much better of a stick and string for the purpose of propelling an arrow.

One of the reasons I went with a K2 (still under construction) is its lack of frills for doing what I want to do with it (exchange CW sigs on HF) but still has an RX with a performance level exceeding frankly most of the other rigs on the market.

Even so, the K2 is still going to end up being, how shall I put it, pretty luxurious of a rig for what I'm going to do. yet it's considered kind of "old" technology nowadays, especially with rigs like the K3 to compare to.
My other rig currently is a 706MKIIG and it's a high-tech beastie compared to what I grew up on when I was a new ham (Heathkit DX-60B and a pair of SB's when I was in college).

As for Elecraft going for it and becoming a big company, tell you the truth that's a sure way to ruin a good company. In my career (software) I've worked for one or two companies that were small when I joined and then became big. I think those were the worst things that ever happened to those places and that's in fact the major reason I don't work for those places anymore.

I don't know what Elecraft's financial situation is but I sure hope they can resist the urge to "go big". It's a privilege to be able to build a rig of the K2's quality myself (tho it's pushing my soldering, building, toroid-winding skills right up to the limit, but hey). And if everything goes right in future, I hope to build a K3 too.

I know you have to keep up with the markets, but I hope at the same time we little guys don't get forgotten about hi hi!

73,
LS
W5QD

[Phil Hystad]

Terry,

Yes, and as I explained to someone else, I too have been involved in this
sort of thing for decades.  Only our business was not a packaged product like
Pepsi, it was software.  As everyone knows, giving away software as a means
of generating interest in other revenue producing products is not uncommon.

Someone earlier mentioned the need for determining the ROI of a new product
as a means of justifying its production and sale.  However, that ROI does not
need to be on that new product but rather it can be on another product.

Let us suppose that Elecraft developed an amplifier that they sold at a break-even
price.  But, this product could easily be used by many people who DO NOT
use or buy other Elecraft products.  If the amplifier is a success (not in revenue but
rather in popularity and respect) then it is very likely to increase, maybe
substantially, the sales of products like the K3, K2, P3, or K3+ as new customers
are brought into the fold.

Yes, "loss leaders" are a very important "tool" in doing business.

73, phil, K7PEH


On Feb 9, 2010, at 8:11 AM, Terry Schieler wrote:

> It's known as a "loss leader" Phil.  Been around in retail marketing for
> years.  Advertise Pepsi at an unbelievably low price hoping to draw
> customers into the store that might just pick up some Doritos or other
> products in that aisle at a decent enough profit margin to keep the bottom
> line in the black on average.  And, it works!
>
> 73,
>
> Terry, W0FM
> K3 474
>
> -----Original Message-----
> From: Phil Hystad [mailto:[hidden email]]
> Sent: Tuesday, February 09, 2010 12:21 AM
> To: Conway Yee
> Cc: [hidden email]
> Subject: Re: [Elecraft] On the advisability of selling kit radios
>
> I learned a little new thing about Toyota marketing just this week.  Toyota
> of course has been
> in the news lately with the massive recalls.  It was reported that the
> Toyota Prius Hybrid
> is subsidized by about $2500 to $3000 by Toyota.  That is, the Prius whole
> sale price to
> the dealers is a few thousand dollars less then it costs to build.  Every
> Prius car sold is a money
> loser for Toyota!
>
> Toyota is happy with this though (they said so) because it is their
> front-line product.
> It is the product that gives them name recognition, the product that brings
> them
> Kudos for high-tech achievements, and the product that brings customers
> through
> their doors.
>
> Thus, a company does not need to make money on a given product to justify
> its
> production and sale -- there are other reasons to build products.
>
> A smart company will choose the profit margin for each product individually.
> It is
> rare for all products to be treated the same.  Some will bring in a margin
> of 40%,
> others only 5%, and then maybe others, by plan, minus 10%.
>
> The Elecraft K3 may have a 30 % margin and maybe the K2, being in production
> for so long is now about 50 % margin.  But, a new solid-state amp may only
> be
> 5% or 7% -- enough to make their customers happy without losing money but
> not
> earning money like a K3 or a K2 either.
>
> phil, K7PEH
>
>
>

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[Bob - W0GI]

<<<<<<<<< Certainly there is no good reason to start a company selling a 100 Watt
kit SSB/CW rig....OTOH Elecraft bet it could and it would appear that they
are successful. >>>>>>>>>>

There are some flaws in the logic. The K2 wasn't just another 100W HF and it still isn't today.

A base K2 was and is a CW QRP rig with a top-end receiver and very low current draw. There was nothing competing with it then, and there isn't anything competing with it now.  If you want a QRP rig with a top-end receiver and the lowest current consumption possible, then even the K3 doesn't complete as it draws 4 times the current on receive. the K1 and KX1 don't have the top-end receiver, but current consumption is a fraction of the K2. I love my K1, and the receiver is plenty good enough for the "wire in a tree". With the internal batteries and tuner, I don't need to carry more then a paddle and wire to operate for a long time.

Yes, you can add all the options to a K2, and have a excellent 100W rig, but if it had been introduced as an "all options only" 100w kit, it would have been expensive, and I don't know if Elecraft would be around today.

Elecraft started out making a rig that was like nothing else available. There was a big void to fill.  Amplifiers are a different story. Where is the void?  If you have the money, there are amps that do the job automatically, without any user input needed, other then the ON/OFF switch.

As for a loss leader, high power SS amps are great, but those transistors aren't rugged like tubes, and oscillation problems and other issues blowing very expensive transistors could become a big drain on Elecraft's profits.

With the design issues and expense, and after the sale expense, I think Elecraft would be wise to stay out of the amp business. It would be a big risk.


 

 

[kk7ss]

Having worked (contract) for several small companies that having a great product, like Topsy, "just grew"

They got bigger, brought in the Bean-counters, which meant "cost reduction" (aka cheaper) and the quality went down.

I strongly suspect that's what has happened to Toyota with their commonality of parts (cost reduction)

I wouldn't like to see Elecraft go the same route

As for building kit radios... nothing beats the "Wow! it's working! " feeling  ;^D

Dave G.

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[David Gilbert]

Spoken like a true sales guy.  In some businesses (including the one I managed for several years before I retired), that is indeed a viable business strategy.

But it's a brainless strategy to use indiscriminately, and lots of companies have sunk their ship by not understanding how and when to use it.  How many additional K3's do you think Elecraft would sell ("pull-through") because they marketed a high power amplifier?  How much additional profit margin do you think Elecraft would make on their other products (overhead dilution and vendor leverage)) because they marketed a power amplifier?  How much do you think Elecraft would learn that could be applied toward building even better transceivers because they were building a high power amplifier?  Next to nothing in all cases, in my opinion.

And, maybe most importantly ... how much sense does it make for your most costly (by far) product to be your loss leader?

As I said before, if Elecraft can develop and sell a high power amplifier for a reasonable profit, that's great.  Otherwise, I hope they don't try because I'd sure like to see them still be here a few years from now.

Dave   AB7E




------Original Mail------
From: "Terry Schieler" <[hidden email]>
To: "'Phil Hystad'" <[hidden email]>,
    "'Conway Yee'" <[hidden email]>,
    <[hidden email]>
Sent: Tue, 9 Feb 2010 10:11:56 -0600
Subject: Re: [Elecraft] On the advisability of selling kit radios

It's known as a "loss leader" Phil.  Been around in retail marketing for
years.  Advertise Pepsi at an unbelievably low price hoping to draw
customers into the store that might just pick up some Doritos or other
products in that aisle at a decent enough profit margin to keep the bottom
line in the black on average.  And, it works!

73,

Terry, W0FM
K3 474

-----Original Message-----
From: Phil Hystad [mailto:[hidden email]]
Sent: Tuesday, February 09, 2010 12:21 AM
To: Conway Yee
Cc: [hidden email]
Subject: Re: [Elecraft] On the advisability of selling kit radios

I learned a little new thing about Toyota marketing just this week.  Toyota
of course has been
in the news lately with the massive recalls.  It was reported that the
Toyota Prius Hybrid
is subsidized by about $2500 to $3000 by Toyota.  That is, the Prius whole
sale price to
the dealers is a few thousand dollars less then it costs to build.  Every
Prius car sold is a money
loser for Toyota!

Toyota is happy with this though (they said so) because it is their
front-line product.
It is the product that gives them name recognition, the product that brings
them
Kudos for high-tech achievements, and the product that brings customers
through
their doors.

Thus, a company does not need to make money on a given product to justify
its
production and sale -- there are other reasons to build products.

A smart company will choose the profit margin for each product individually.
It is
rare for all products to be treated the same.  Some will bring in a margin
of 40%,
others only 5%, and then maybe others, by plan, minus 10%.

The Elecraft K3 may have a 30 % margin and maybe the K2, being in production
for so long is now about 50 % margin.  But, a new solid-state amp may only
be
5% or 7% -- enough to make their customers happy without losing money but
not
earning money like a K3 or a K2 either.

phil, K7PEH



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[Bob - W0GI]

<<<< How many additional K3's do you think Elecraft would sell ("pull-through") because they marketed a high power amplifier? >>>>

And how many less would they sell, if there were major problems with some very expensive amps, causing a lot of negative talk?

We all know Elecraft has some fine engineers. At the same time, high power solid state amps aren't exactly child's play to design with high reliablilty. Add some users that do stupid things and connect horrific loads to an amp, and it better have some serious design attributes to prevent frying very expensive transistors.

Considering the high cost of the components that would fail, and the high cost of shipping a heavy amp to and from Elecraft, it could become a very bad and costly situation, very quickly.

Reputation shot to hell, and money down the drain.

Icom, Yaesu, and Kenwood all have waded in the amp market, but I bet there are a lot more Alpha amps out there then all of their amps combined.  
 
And to be realistic, those of us that have Elecraft gear would look at an Elecraft amp differently then the masses.

Everyone else would look at Alpha and some others as tried and true, and Elecraft as that company that make those cool "little" radios, and question how these new amps will hold up long term. It would take years of great performance to get a great reputation out in the general ham population. But only a few months of problems to get a poor reputation. People love to complain.

Very risky stuff, when things are going so well with the current products. :>)

[Terry Schieler]

Nicely stated Dave.  Just because "loss leader" works in retail does not
make it a cure all.  Elecraft is not retail by our mainstream standards.  It
is "sort of" retail, but more likely a "niche" vendor.  It cannot be
compared to Pepsi, Doritos or any other main stream retail products.  That
was not my intent.  

My point was simply that the poster's comment that a loss leader "could"
work was worth a comment.  But, that's Wayne's and Eric's call.

My business is also a niche business, but becoming more retail every day.  I
have seen evidence of others in my field using "loss leaders" to promote
their business.  One guy went nuts and won a huge bid on a "loss leader"
price.  Then he had to provide the goods for that price and his business
tanked.  The BOTTOM LINE lies in THE REAL "bottom line".  

I think Eric and Wayne have done their homework on their product research
introductions in the past and we all enjoy the results of their toils.  I
hope they continue to play off their success.  And, I wish them (and US)
much success in the future.

73,

Terry, W0FM
K3 #474



-----Original Message-----
From: Dave - AB7E [mailto:[hidden email]]
Sent: Tuesday, February 09, 2010 7:43 PM
To: [hidden email]; [hidden email];
[hidden email]; [hidden email]
Subject: Re: [Elecraft] On the advisability of selling kit radios


Spoken like a true sales guy.  In some businesses (including the one I
managed for several years before I retired), that is indeed a viable
business strategy.

But it's a brainless strategy to use indiscriminately, and lots of companies
have sunk their ship by not understanding how and when to use it.  How many
additional K3's do you think Elecraft would sell ("pull-through") because
they marketed a high power amplifier?  How much additional profit margin do
you think Elecraft would make on their other products (overhead dilution and
vendor leverage)) because they marketed a power amplifier?  How much do you
think Elecraft would learn that could be applied toward building even better
transceivers because they were building a high power amplifier?  Next to
nothing in all cases, in my opinion.

And, maybe most importantly ... how much sense does it make for your most
costly (by far) product to be your loss leader?

As I said before, if Elecraft can develop and sell a high power amplifier
for a reasonable profit, that's great.  Otherwise, I hope they don't try
because I'd sure like to see them still be here a few years from now.

Dave   AB7E




------Original Mail------
From: "Terry Schieler" <[hidden email]>
To: "'Phil Hystad'" <[hidden email]>,
    "'Conway Yee'" <[hidden email]>,
    <[hidden email]>
Sent: Tue, 9 Feb 2010 10:11:56 -0600
Subject: Re: [Elecraft] On the advisability of selling kit radios

It's known as a "loss leader" Phil.  Been around in retail marketing for
years.  Advertise Pepsi at an unbelievably low price hoping to draw
customers into the store that might just pick up some Doritos or other
products in that aisle at a decent enough profit margin to keep the bottom
line in the black on average.  And, it works!

73,

Terry, W0FM
K3 474

-----Original Message-----
From: Phil Hystad [mailto:[hidden email]]
Sent: Tuesday, February 09, 2010 12:21 AM
To: Conway Yee
Cc: [hidden email]
Subject: Re: [Elecraft] On the advisability of selling kit radios

I learned a little new thing about Toyota marketing just this week.  Toyota
of course has been
in the news lately with the massive recalls.  It was reported that the
Toyota Prius Hybrid
is subsidized by about $2500 to $3000 by Toyota.  That is, the Prius whole
sale price to
the dealers is a few thousand dollars less then it costs to build.  Every
Prius car sold is a money
loser for Toyota!

Toyota is happy with this though (they said so) because it is their
front-line product.
It is the product that gives them name recognition, the product that brings
them
Kudos for high-tech achievements, and the product that brings customers
through
their doors.

Thus, a company does not need to make money on a given product to justify
its
production and sale -- there are other reasons to build products.

A smart company will choose the profit margin for each product individually.
It is
rare for all products to be treated the same.  Some will bring in a margin
of 40%,
others only 5%, and then maybe others, by plan, minus 10%.

The Elecraft K3 may have a 30 % margin and maybe the K2, being in production
for so long is now about 50 % margin.  But, a new solid-state amp may only
be
5% or 7% -- enough to make their customers happy without losing money but
not
earning money like a K3 or a K2 either.

phil, K7PEH



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[Dick Dickinson]

The 2010 ARRL Handbook was Elecraft's Loss Leader...not that it didn't get
them capital in other areas.

73,
Dick - KA5KKT

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