The Bluetooth price is right - or is it???
This story was published in the February 2010 issue of Incisor, and has already generated a number of email comments. A worthy contender then for putting up here in public forum. Please feel free to comment as you see fit.
Is Bluetooth pricing restricting the market?
Does your jaw ever drop at the price you are being expected to pay for things? Mine does, and especially because prices for consumer goods, ranging from a pint of milk, to a TV, to a car, seem to march unstoppably upwards, while my income has been static or falling for as long as I can remember (cue tears, please).
Like most guys, I have been a car nut for most of my life, and so one of the bellwethers for my assessment of pricing policies has been the price I have to pay for my cars. This is an area of stunning disparities. From the February 2010 issue of Car magazine, which I have read for more than 20 years and whose editorial standards I have always hoped to emulate, I see that BMW thinks it is acceptable to ask me to pay £33,000 for a Mini John Cooper Works 50. £33,000!!! That is about $53,450 for our American readers. Now, most of you will know that BMW’s Mini is a modern interpretation of a very, very small car designed in the Sixties by Alec Issigonis. It was a hugely successful, classless, spacious (for its size) and inexpensive mode of transport and occupied a sector of the market currently occupied by cars like the Suzuki Swift, Toyota Yaris, all of which have list prices that start below £10,000. Where does the other £23,000 go, BMW?
The modern Mini is still built in the UK, takes up a bit more space on the road, and has a few more gizmos than the original car, but $53,000!!! For the same price in the USA you can buy a brand new BMW 528i from a BMW dealer. How can that be? The 5-Series is two and half times as big as the Mini, has about the same multiplier more materials in it, and massively outscores the Mini for on-board technology.
And how can it be that a few pages after the report on the stupidly-priced Mini, there is a full page advert from Chrysler for the 300C, a massive, stately-looking car that has been built in the USA and shipped to the UK, and yet is being offered by the manufacturer (not, note, a discounting dealer) for a list price of £23,995 - £10,000 less than the built in the UK Mini. Again, the 300C is a full size saloon car with a leather interior, dual-zone climate control, Sat Nav, MP3 and so on. It has established a place in our market as a bit of a poor(-ish) man’s Bentley. How does this pricing thing work?
And don’t start me on the fact that Britain’s GM outpost – Vauxhall , provider of basic transport to sales reps for as long as the sun has been rising – now charges £22,000 ($35,640) for a 1.7 litre Diesel-engined Astra. The Astra, for those that don’t know it, is a small hatchback. And Volvo wants us to pay £39,000 for an electric C30, which is no over-blown SUV, but another small hatchback.
What? I say again – what????
So here’s the point
And why on earth am I raving about this in Incisor (finally, you say, he gets to the point)? Well, it is because for the last few months I have been travelling the world talking to consumers about Bluetooth. Let us set aside just for this minute any issues over set-up, interoperability, ergonomics, and even fashion. Overall, with later Bluetooth silicon now populating the devices that consumers are buying, that situation is improving. However, one message that has been universal and which continues to be heard as loudly as ever has been that consumers want Bluetooth to be cheaper than it is. And you can see their point. Let’s pick a good quality Bluetooth headset – the Jawbone Prime, for example. That sells for £99 at my local Apple store. A Plantronics Voyager PRO sells for £81. Go for a bit of luxury and a Bang & Olufsen EarSet 2 sells for £200 here in the UK and $350 in the US! The B&O example may be a bit extreme, as the company has a long-established reputation for selling beautifully styled, technically competent but ridiculously over-priced gear, but the others are examples of good quality Bluetooth headsets of the type that provide the sort of Bluetooth experience we would like consumers to have. The sort of experience that does away with a lot of the set-up, interoperability, ergonomic, and fashion issues that have littered Bluetooth’s path to greatness.
Some would say that £99 for the Jawbone is not a lot of money, and if you work in sales and marketing in the electronics industry you probably spend your life justifying the cost of the devices your company produces. But put yourself in the place of the average, over-stretched consumer. They look at what is unarguably a very small piece of electronic equipment. And then they look at the price tag. Then they mentally put this piece of gizmo-wizardly alongside the 15” flat panel HD TV with built-in Freeview tuner that they can but for £109 from a top UK electronics retailer. And they wonder why the teeny-weeny Bluetooth headset costs 88% of what the TV costs. Or a full-size refrigerator also at £109, or why the little headset costs more than half of what they can buy a Nintendo Wii for.
Stick with technology gadgets and it’s easy to find latest technology 802.11n Wi-Fi Access points from big name companies such as D-Link and Netgear, claiming 300Mbps throughput, MiMo technology and physically consisting of damned big cases presumably containing lots of components, and selling for considerably less than those Bluetooth headsets - £60 - 80.
If we face the harsh truth, some of these are items a consumer will desire more than a Bluetooth headset, and some he or she will undoubtedly need more. These items also score higher on the basis of perceived value – or at least kilogram’s of tech per buck!
As ever, it is a tough call for the Bluetooth headset company that has poured millions into developing its products and would like to see a return on the investment. But it is more than just the headset companies that are delivering consumers the same conundrum. If you spec a BMW for ‘Bluetooth phone preparation’ the cost is £535. Audi’s ‘Mobile Phone Preparation’ is £525. Gulp!
Sometimes, a little knowledge is a depressing thing
Having worked in the electronics and technology industry for most of my life, I’ve had a semi-privileged insight into what consumer electronics products cost to make. This has caused me to furrow my brow on a regular basis when faced with a retail price that seems to bear little or no relation to the BOM cost for a particular item I am contemplating purchasing. Maintaining my relentless and probably unfair focus on the poor old Bluetooth headset, I’m aware that most of the volume manufacturers will be paying between $1-2 for their Bluetooth 2.1 silicon. Take the middle of that range and it is about £0.92p in real money. Then there is a tiny pcb, a few other components and a plastic casing. I’m ready to be deluged with better-informed estimates, but where does that put us for a total BOM cost for that £88 headset? £5? £6? Go crazy and say £10? My guess is it is nearer the lower estimate.
I sympathise with both the consumer and with the manufacturer. The consumer really struggles to know how a tiny (and if we are honest, many are cheap-looking) electronic device, which most people will feel is an item of desire rather than need, can cost so much money? The poor manufacturers, still excited by the potential size of the Bluetooth market, wonder why sales aren’t higher? They will argue that when volumes grow, so prices will come down. But volumes have grown, and Bluetooth headsets have been around for approaching ten years now, yet still a quality Bluetooth headset sells for £50 – 80.
True, there are cheaper Bluetooth headsets out there, including some perfectly good ones. But at the lower end there are still plenty of truly awful products, and consumers aren’t really positioned to tell which cheap Bluetooth headsets are worth buying, and which will cause a lifetime of hassle and poor performance to rain down upon them. These are the types of headset that are prolonging the negativity that impacts on Bluetooth’s overall growth potential.
There is no magic wand solution. As time goes by, early-generation Bluetooth headsets will finally be cleared from retailer’s shelves. Later spec products will find their way into the hands of consumers, and the way will be clear for Bluetooth to finally become loved by consumers. In the meantime, manufacturers will continue to hold out with high prices for their Bluetooth headsets, and consumers will ask themselves: a Bluetooth headset or a TV/dishwasher/games console for the same-ish money? And the way this decision goes will not be hard to predict.
Thus, one reason why headset sales aren’t higher will continue to be reasonably easy to identify.
And we haven’t even touched upon stereo headsets ....
Is Bluetooth pricing restricting the market?
Does your jaw ever drop at the price you are being expected to pay for things? Mine does, and especially because prices for consumer goods, ranging from a pint of milk, to a TV, to a car, seem to march unstoppably upwards, while my income has been static or falling for as long as I can remember (cue tears, please).
Like most guys, I have been a car nut for most of my life, and so one of the bellwethers for my assessment of pricing policies has been the price I have to pay for my cars. This is an area of stunning disparities. From the February 2010 issue of Car magazine, which I have read for more than 20 years and whose editorial standards I have always hoped to emulate, I see that BMW thinks it is acceptable to ask me to pay £33,000 for a Mini John Cooper Works 50. £33,000!!! That is about $53,450 for our American readers. Now, most of you will know that BMW’s Mini is a modern interpretation of a very, very small car designed in the Sixties by Alec Issigonis. It was a hugely successful, classless, spacious (for its size) and inexpensive mode of transport and occupied a sector of the market currently occupied by cars like the Suzuki Swift, Toyota Yaris, all of which have list prices that start below £10,000. Where does the other £23,000 go, BMW?
The modern Mini is still built in the UK, takes up a bit more space on the road, and has a few more gizmos than the original car, but $53,000!!! For the same price in the USA you can buy a brand new BMW 528i from a BMW dealer. How can that be? The 5-Series is two and half times as big as the Mini, has about the same multiplier more materials in it, and massively outscores the Mini for on-board technology.
And how can it be that a few pages after the report on the stupidly-priced Mini, there is a full page advert from Chrysler for the 300C, a massive, stately-looking car that has been built in the USA and shipped to the UK, and yet is being offered by the manufacturer (not, note, a discounting dealer) for a list price of £23,995 - £10,000 less than the built in the UK Mini. Again, the 300C is a full size saloon car with a leather interior, dual-zone climate control, Sat Nav, MP3 and so on. It has established a place in our market as a bit of a poor(-ish) man’s Bentley. How does this pricing thing work?
And don’t start me on the fact that Britain’s GM outpost – Vauxhall , provider of basic transport to sales reps for as long as the sun has been rising – now charges £22,000 ($35,640) for a 1.7 litre Diesel-engined Astra. The Astra, for those that don’t know it, is a small hatchback. And Volvo wants us to pay £39,000 for an electric C30, which is no over-blown SUV, but another small hatchback.
What? I say again – what????
So here’s the point
And why on earth am I raving about this in Incisor (finally, you say, he gets to the point)? Well, it is because for the last few months I have been travelling the world talking to consumers about Bluetooth. Let us set aside just for this minute any issues over set-up, interoperability, ergonomics, and even fashion. Overall, with later Bluetooth silicon now populating the devices that consumers are buying, that situation is improving. However, one message that has been universal and which continues to be heard as loudly as ever has been that consumers want Bluetooth to be cheaper than it is. And you can see their point. Let’s pick a good quality Bluetooth headset – the Jawbone Prime, for example. That sells for £99 at my local Apple store. A Plantronics Voyager PRO sells for £81. Go for a bit of luxury and a Bang & Olufsen EarSet 2 sells for £200 here in the UK and $350 in the US! The B&O example may be a bit extreme, as the company has a long-established reputation for selling beautifully styled, technically competent but ridiculously over-priced gear, but the others are examples of good quality Bluetooth headsets of the type that provide the sort of Bluetooth experience we would like consumers to have. The sort of experience that does away with a lot of the set-up, interoperability, ergonomic, and fashion issues that have littered Bluetooth’s path to greatness.
Some would say that £99 for the Jawbone is not a lot of money, and if you work in sales and marketing in the electronics industry you probably spend your life justifying the cost of the devices your company produces. But put yourself in the place of the average, over-stretched consumer. They look at what is unarguably a very small piece of electronic equipment. And then they look at the price tag. Then they mentally put this piece of gizmo-wizardly alongside the 15” flat panel HD TV with built-in Freeview tuner that they can but for £109 from a top UK electronics retailer. And they wonder why the teeny-weeny Bluetooth headset costs 88% of what the TV costs. Or a full-size refrigerator also at £109, or why the little headset costs more than half of what they can buy a Nintendo Wii for.
Stick with technology gadgets and it’s easy to find latest technology 802.11n Wi-Fi Access points from big name companies such as D-Link and Netgear, claiming 300Mbps throughput, MiMo technology and physically consisting of damned big cases presumably containing lots of components, and selling for considerably less than those Bluetooth headsets - £60 - 80.
If we face the harsh truth, some of these are items a consumer will desire more than a Bluetooth headset, and some he or she will undoubtedly need more. These items also score higher on the basis of perceived value – or at least kilogram’s of tech per buck!
As ever, it is a tough call for the Bluetooth headset company that has poured millions into developing its products and would like to see a return on the investment. But it is more than just the headset companies that are delivering consumers the same conundrum. If you spec a BMW for ‘Bluetooth phone preparation’ the cost is £535. Audi’s ‘Mobile Phone Preparation’ is £525. Gulp!
Sometimes, a little knowledge is a depressing thing
Having worked in the electronics and technology industry for most of my life, I’ve had a semi-privileged insight into what consumer electronics products cost to make. This has caused me to furrow my brow on a regular basis when faced with a retail price that seems to bear little or no relation to the BOM cost for a particular item I am contemplating purchasing. Maintaining my relentless and probably unfair focus on the poor old Bluetooth headset, I’m aware that most of the volume manufacturers will be paying between $1-2 for their Bluetooth 2.1 silicon. Take the middle of that range and it is about £0.92p in real money. Then there is a tiny pcb, a few other components and a plastic casing. I’m ready to be deluged with better-informed estimates, but where does that put us for a total BOM cost for that £88 headset? £5? £6? Go crazy and say £10? My guess is it is nearer the lower estimate.
I sympathise with both the consumer and with the manufacturer. The consumer really struggles to know how a tiny (and if we are honest, many are cheap-looking) electronic device, which most people will feel is an item of desire rather than need, can cost so much money? The poor manufacturers, still excited by the potential size of the Bluetooth market, wonder why sales aren’t higher? They will argue that when volumes grow, so prices will come down. But volumes have grown, and Bluetooth headsets have been around for approaching ten years now, yet still a quality Bluetooth headset sells for £50 – 80.
True, there are cheaper Bluetooth headsets out there, including some perfectly good ones. But at the lower end there are still plenty of truly awful products, and consumers aren’t really positioned to tell which cheap Bluetooth headsets are worth buying, and which will cause a lifetime of hassle and poor performance to rain down upon them. These are the types of headset that are prolonging the negativity that impacts on Bluetooth’s overall growth potential.
There is no magic wand solution. As time goes by, early-generation Bluetooth headsets will finally be cleared from retailer’s shelves. Later spec products will find their way into the hands of consumers, and the way will be clear for Bluetooth to finally become loved by consumers. In the meantime, manufacturers will continue to hold out with high prices for their Bluetooth headsets, and consumers will ask themselves: a Bluetooth headset or a TV/dishwasher/games console for the same-ish money? And the way this decision goes will not be hard to predict.
Thus, one reason why headset sales aren’t higher will continue to be reasonably easy to identify.
And we haven’t even touched upon stereo headsets ....
posted by Vince Holton at
3:20 AM
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