Not exactly 'news' but premiere is cheaper to build

MichaelK · 03-08-2010, 09:14 PM

from todays conference call:

'The Improved manufacturing economics of premiere allow the hardware component of our subscriber acquisition costs (SAC) to improve. '

NOT WORD FOR WORD- as my typing stinks so i was strigling to keep up

also mentioned that last quarters SAC was elevated from single tuner SD subs upgrading to HD boxes. So they do in fact take a hit when we upgrade from one box to another.

sdzc · 03-09-2010, 08:38 PM

Which is exactly why I wonder why it is the same costs as the TivoHD. I can't help but think it was a mistake for Tivo to price this thing at $299.

Not a good price to get this to the masses.

bsnelson · 03-10-2010, 12:17 AM

Quote:

Originally Posted by sdzc

Which is exactly why I wonder why it is the same costs as the TivoHD. I can't help but think it was a mistake for Tivo to price this thing at $299.

Not a good price to get this to the masses.

Perhaps, but people are strange. Many see $299 and think "Oh, it's two hundred and something", whether it's $299, $249 or $209. I'd bet the only way to get any "wow" factor from pricing would be to have a 1 in front, and I'm quite sure that wasn't doable.

Plus, they want NEW subscribers, those who may not even know what a TiVo HD is or how much it costs.

Brad

MichaelK · 03-10-2010, 08:47 AM

Quote:

Originally Posted by sdzc

Which is exactly why I wonder why it is the same costs as the TivoHD. I can't help but think it was a mistake for Tivo to price this thing at $299.

Not a good price to get this to the masses.

the S3 cost an arm, a leg, and your fist born kid when it came out then it dropped.

the Price today for a PREORDER is 299.

who knows what it is in 3 months.

that said- they still lost a boatload on the TivoHD's so for the same retail price they only lose less and still dont make any money.

dswallow · 03-10-2010, 09:06 AM

What'll piss you off more?

A $299 price they'll discount to $199 sometimes, or a $199 price they'll never go below?

Damn marketers.

jmpage2 · 03-10-2010, 09:08 AM

This paves the way to a $199 or even $149 Premiere in six months to a year. They will skim the cream off with the early adopters and TiVo diehards and then bring pricing down to consumer levels by the holiday season.

I wouldn't be surprised to even see them do a $399 bundle of lifetime service with a Premiere this holiday season if sales don't start to improve for them.

MichaelK · 03-10-2010, 09:43 AM

Quote:

Originally Posted by dswallow

What'll piss you off more?

A $299 price they'll discount to $199 sometimes, or a $199 price they'll never go below?

Damn marketers.

ask apple- they dont seem to ever win- lol.

Personally i have a brain hurt trying to decide if i should hold on to my old boxes till they die and then worry about buying lifetime with what I'm sure will be a cheaper than 299 retail. Or if I should take advantage of the lifetime "transfer" deal now at the 299 point.

I guess at the moment I'll let something else decide and see what my accountant says about my taxes. If things are better than what I planned then I'll buy now and if worse than I'll wait it out.

jfh3 · 03-10-2010, 02:15 PM

Tivo lost money on every Series 2 and Series 3/HD box sold. If the cost to manufacturer went down and the price remains $299, then Tivo loses less $ (good), breaks even (better) or even makes a small profit on the hardware (best).

That said, I agree with those that believe we'll see discounts later this year, perhaps to the "magic" number of $199.

jmpage2 · 03-10-2010, 02:18 PM

Something many fail to realize is that TiVo is producing fairly small batches of these devices and they contain some specialized components that are more expensive than we would think.

Additionally TiVo must employ their own hardware engineers to design and test the boxes and make sure that they meet all standards for FCC, CableCard, etc.

Even if the box manufacturing cost is as low as $150 it is likely that TiVo is losing money when they sell them to a Best Buy, etc, at a $225 price, due to all of their other overhead with warranty support, design, etc.

CrispyCritter · 03-10-2010, 03:14 PM

Quote:

Originally Posted by jmpage2

Something many fail to realize is that TiVo is producing fairly small batches of these devices and they contain some specialized components that are more expensive than we would think.

Additionally TiVo must employ their own hardware engineers to design and test the boxes and make sure that they meet all standards for FCC, CableCard, etc.

Even if the box manufacturing cost is as low as $150 it is likely that TiVo is losing money when they sell them to a Best Buy, etc, at a $225 price, due to all of their other overhead with warranty support, design, etc.

Design and test is accounted for entirely separately, but as you say, is very expensive and has to be paid for somehow.

In the figures released Monday, TiVo got $48M in hardware revenue last year. The cost of that hardware revenue was $66M - so TiVo lost just under 30% on hardware (or put another way, they would have had to raise their prices by 40% in order to break even on hardware). Research and development costs were an additional $63M

I think it's very unlikely that the costs of the Premier have gone down enough to hit the break-even point.

mr.unnatural · 03-11-2010, 07:14 AM

Quote:

Originally Posted by MichaelK

the S3 cost an arm, a leg, and your fist born kid when it came out then it dropped.

the Price today for a PREORDER is 299.

who knows what it is in 3 months.

that said- they still lost a boatload on the TivoHD's so for the same retail price they only lose less and still dont make any money.

That's nothing. The HR10-250 HDTivo sold for $999 when it was first introduced and didn't drop in price for quite a while. I bought my S3 Tivos when they were selling for $600 and not the $799 early adopter price.

Tivo earns their profits by selling you the Tivo service and not the box. It's along the same lines as your cellphone provider. They'll subsidize the cost of the phone in exchange for a long-term commitment from you to pay for their service. The hardware gets paid for in the long run and they still turn a profit.

Being an early adopter of any technology demands that you pay a high premium as the price of admission. As the technology improves and manufacturing is refined, the costs start dropping. Just look at what VCRs used to cost when they first came out. A Betamax the size of a carry-on suitcase would easily cost over a grand.

atmuscarella · 03-11-2010, 07:35 AM

Quote:

Originally Posted by jfh3

Tivo lost money on every Series 2 and Series 3/HD box sold. If the cost to manufacturer went down and the price remains $299, then Tivo loses less $ (good), breaks even (better) or even makes a small profit on the hardware (best).

That said, I agree with those that believe we'll see discounts later this year, perhaps to the "magic" number of $199.

I would say that those who have a the offer that allows them to buy a TiVo Premier for $500 with lifetime are already pretty much see the best deal you are going to see. Think about it the normal cost lifetime (if you have a qualifying sub) is $299 the Premier would have to be sold for less than $199 for the deal to any get better than it is now. Heck Amazon is still selling TiVo HDs for over $199.

Thanks,