Dishnet discussion Split from PVR Interview thread

[Gimli]

Originally Posted by Nimiq 1

Well just so you know, if an Installer "looses" a receiver, then we the Installation Company is charged the landed cost for it's replacement.

The 9200 had a landed cost of $828, so I would imagine the 9242 is at least this and possibly more.

So installers get screwed too. What's new?

[Nimiq 1]

Please do not get me started on that subject.....lol

[Simmer]

Originally Posted by Gimli

I also very much doubt Bell isn't making money off a $600 receiver. If you think so you're greatly misinformed.

Gimli, I've been in the electronics business for 24 years, 16 of those in telecommunications, so I certainly hope I'm not misinformed.

I will grant you that BEV may realize a reasonable gross margin on 9200 sales since the box probably costs between $250 and $350 to manufacture. But when you factor in the sales channel mark-up (Future Shop, Best Buy, etc. have to make money too), the R&D associated with the software development, and the support costs; I highly doubt BEV makes much profit, if any, on STB sales.

BEV (and the rest of Bell) run a service based business model, not product based. The hardware portion of their business is break-even, best case. In fact under a service model, hardware is often subsidized (e.g "free" cell phone with a 3 year contract).

If you check out page 15 of Bell's latest quarterly report you will see that there is no mention of revenue or profit associated with STB sales since this is minuscule compared to subscriber revenues. They quoted their average monthly revenue per BEV subscriber as $58, which is >95% of total BEV revenue. Adding new subscribers and up-selling services to the existing ones is what motivates BEV, not selling STB's.

[Gimli]

So you maintain the stupid argument I was refuting that BEV didn't make the 9242 much better than the 9200 because they're already better than similar cable products and didn't want people to buy 9242s because they don't make any money on them?

[Gimli]

Originally Posted by Simmer

If you check out page 15 of Bell's latest quarterly report you will see that there is no mention of revenue or profit associated with STB sales since this is minuscule compared to subscriber revenues. They quoted their average monthly revenue per BEV subscriber as $58, which is >95% of total BEV revenue. Adding new subscribers and up-selling services to the existing ones is what motivates BEV, not selling STB's.

So in your mind BCE makes no significant profit on hardware on anything but the Sympatico PC purchase program and whatever Bell West sells because nothing else is mentioned? That's a ridiculous assessment of Bell's business based on incomplete information.

Should I also point out to you that STBs are not mentioned in the same paragraph as one of the reasons offseting factors to the increased revenues? According to your logic that must mean they don't lose any money on them either.

[Nimiq 1]

I have a listing of all "Landed Costs" from Express Vu on all products used for the Satellite Installations.

Express Vu charge us, the installation company, for any receivers they have shipped to us and NOT activated after an Inventory has been carried out.

For examples, 9200 is billed to us at $828, 3100 / 4100 is billed at $142.

It would be cheaper for us to go to the local Bell World and pay $599 & $99 respectively than pay Express Vu's "Landed Costs" however, as always this is not permitted.

And just for some clarification, when we are referring to receivers not activated, this is done by taking a snapshot in time and working from that Data, so Express Vu ALWAYS try to invoice us for receivers installed but De-activated at the time of this snap shot.

The amounts are sometimes unbelievable, last year invoices from Express Vu were in excess of $100,000 yet we can prove that most of these were actually installed but at the time of the snapshot, were de-activated for several reasons.

[Simmer]

Originally Posted by Gimli

So you maintain the stupid argument I was refuting that BEV didn't make the 9242 much better than the 9200 because they're already better than similar cable products and didn't want people to buy 9242s because they don't make any money on them?

My original point was that BEV introduced the 9242 to get MPEG4 compatibility into their installed base and that other features such as disk size are secondary. I didn't say BEV didn't want subscribers to buy 9242's.

So in your mind BCE makes no significant profit on hardware on anything but the Sympatico PC purchase program and whatever Bell West sells because nothing else is mentioned? That's a ridiculous assessment of Bell's business based on incomplete information.

You seem to have missed my point that BEV is running service business versus a product business. The report makes it clear that BEV's priority is to add new subscribers and up-sell services to existing subscribers. Selling new hardware to existing subscriber is secondary.

BTW, since we're all speculating here there's no need to be insulting about the merits of one perspective over another.

[Gimli]

Originally Posted by Simmer

You seem to have missed my point that BEV is running service business versus a product business.

I didn't miss your point, I ignored it because it has nothing to do with the topic at hand. In the end the hardware is required to get the service and the hardware is useless without the service so they are intrinsically tied.

You're the one who seemed to have missed my point that by making the 9242 only slightly more appealing to EXISTING subscribers they could have gotten much better market penetration (which is the purpose you're arguing was primary) and therefore saved themselves a lot of hardware replacement money once MPEG4 comes around.

[Simmer]

I recall commenting only on your suggestion that BEV was making money on PVR sales.

I didn't miss your original point. You may be right about the extra 180GB being enough to encourage some people to buy another PVR. Unfortunately this wouldn't achieve the objective of having fewer 9200's to replace when/if BEV cuts over to MPEG4. After all you'd want them to replace the old 9200 you still have, wouldn't you?

[Gimli]

Originally Posted by Simmer

Unfortunately this wouldn't achieve the objective of having fewer 9200's to replace when/if BEV cuts over to MPEG4. After all you'd want them to replace the old 9200 you still have, wouldn't you?

Not if I replaced it with a 9242 I wouldn't. Especially not if I'm a rental customer who's returned the 9200.

Also you seem to imply that BEV may not go MPEG4; they've already officially said they WILL, they just don't know exactly when yet.

[Simmer]

The "if" was meant to suggest that they may not do a hard cut-over to MPEG4 and support both MPEG2 and MPEG4. In that scenario they could claim that they still support the 9200 by maintaining legacy channels with MPEG2 broadcasts, so no obligation to swap them out.