Chapter 372 The Beginning of a New Century
According to the original plan, the engineering prototype of the BB machine should have been released at the end of last year.
But this was the first fully self-developed project of Sur Electric, and Ron overestimated the team's development capabilities.
He wanted to make a small pager, and all he needed was a circuit board and a display screen. What difficulty could it be?
What's more, there are so many homework assignments to copy. No matter what, you can just follow the instructions.
Well, the painting was done, but it looks good but is not practical.
Either the signal is terrible or the battery life is a big problem.
In the end, it took until April of the following year before we finally came up with a qualified design plan.
Sure enough, doing research and development in India is very unreliable.
Even big manufacturers like Sur Electric are stumbling, so don't count on others.
After coming to power, Daxian wanted to use a mere 20 billion US dollars to promote the upgrading of India's manufacturing.
Hammer! India is not born with the spirit of R&D. They always want to take shortcuts. No matter how much money is invested, it will be useless.
Take the small pager in Ron's hand, for example. It looks no different from the ones sold outside.
However, it cost Sur Electric tens of millions of rupees to complete it.
It’s not even known when this investment will pay off, and in the eyes of many people, it’s totally not worth it.
"Is this the final model?" Ron fiddled with the machine in his hand.
"Yes, we have tested it. There is no problem at all in the metropolitan area of Mumbai. The signal can also be received in the slums," replied technical consultant Singh.
"What about battery life?"
"About seven days."
"It's a little short."
"This." Singer really had no choice.
This is the difference between domestic and imported products. They have all the functions, but the tuning is not good enough.
Motorola, Ericsson and other brands generally have a battery life of two weeks, which is twice as long as theirs.
The accumulation of technology cannot be achieved by spending money. The technology of Sur Electric Appliances is at kindergarten level at best.
"We'll first produce a batch and take it to major cities like Mumbai, New Delhi, and Chennai for testing for a few weeks. If there are no problems, we'll launch it on the market."
"Yes, boss." Ashish accepted the order.
These three metropolises are located at the southern, central and northern longitudes of the Indian subcontinent. Their different geographical locations and environments make them very suitable for real-machine testing.
"By the way, what about the cost of our pagers?"
"It's about 600 rupees. The RF chip and microprocessor chip are purchased from Japan, and the LCD display is ordered from Tokyo University. We do the rest of the assembly of patches and battery casings ourselves." Ashish replied.
"Can't Todai handle these chips?" Ron looked at Singer.
"This little thing is very technologically advanced. Apart from Japan and South Korea, no other country in Asia has the ability to independently produce chips."
"Is that so?" Ron still missed the value for money of Todai.
Unfortunately, apart from LCD displays, Dongda cannot help Sur Electric much at present.
"What do you suggest about pricing?"
"The marketing department calculated and concluded that 1,400 to 1,800 rupees is a reasonable price. Currently, all the pagers on the Indian market are imported, and most are priced around 1,800 rupees."
“How much further can the cost be reduced after mass production?”
“About 20%.”
By this calculation, it seems that the pagers produced by Sur Electric have a good profit of 1,000 rupees.
But this is the gross profit. After deducting labor, operating and tax costs, there is only a profit margin of three to five hundred yuan.
"We'd be better off not thinking about pager pricing in isolation."
"Boss, what do you mean?" Ashish asked, and the others were also curious.
"Don't forget about Indian mobile communications. Pagers need to be bundled with services."
"You mean bundling?" Ashish's eyes lit up.
"Yes, the price of the bare phone is 1,600 rupees. But if you sign a bundled contract with India Mobile, you can get it for 1,200 rupees."
"It's so much cheaper?" Cousin Yash was a little surprised.
"Don't forget the contract. They have to use the mobile communication service for two consecutive years, and the monthly package fee is 50 rupees."
Contract phones are very common in later generations.
When competition was at its fiercest, mobile phones were given away for free and the cost was included in the package.
But in India, Ron didn't dare to do that.
You can try it for free. Believe it or not, if Indians get a pager, they will turn around and use the services of other operators for free.
Of course, Sur Electric can make a batch of special-purpose machines and directly lock the frequency band.
But the software-level lock is useless. Indians will dismantle the machine and directly flash it.
They are not afraid of being sued for infringement or anything like that. This is the environment in the entire country. If you don't take advantage of a good opportunity, you're a fool.
So Ron only dared to give some discounts instead of giving it away for free.
The price of the bare phone is 1,600 rupees, and the monthly package fee for activating a monthly service at India Mobile is 30 rupees.
The contract price for the phone is 1,200 rupees, and the package fee is 50 rupees per month for two years, and it cannot be cancelled.
Each has its own advantages and disadvantages, it all depends on how you choose.
Of course, the accounts between the telecommunications company and Sur Electric were settled as usual.
Either purchase at a fixed price or get a share, it’s one thing for another.
The reason why Ron got a contract phone was also for Indian mobile communications.
Without the promotion of pagers, where would the customers come from?
It is impossible to compete with the telecommunications sector in the short term by relying solely on services. We must expand the market and take an incremental approach.
Ron will go to India Communications for a separate meeting regarding the operation of pagers, and now Sur Electric has another set of new products to launch.
It was still Ashish who was the conspicuous bag. He had someone bring in a flat machine that looked like a box.
"VCD?" Ron's eyes lit up.
"Yes, we have tried it and it is absolutely reliable." He patted the machine on the table proudly.
How can it be unreliable? The technology is all from Dongda, and Suer Electric just uses the ready-made ones.
The following operations were exactly as Ron remembered.
Press the eject button, the tray pops out, and the shiny silver CD is stuffed in.
Soon, the projector in the conference room began playing a Bollywood action movie that was popular in the theaters at the end of last year.
The picture quality is very good and the playback is very smooth, no different from the movies played on the movie channel.
Some people may wonder, if they have subscribed to a video channel, why do they still need to watch VCDs?
free!
What the video channels broadcast depends entirely on the TV station.
VCD is your personal property, you can watch it again and again even if it is an old movie from many years ago.
Moreover, due to the copyright of the TV station, the number of films on the video channel is limited.
VCD doesn't care about these things. As long as you can buy it, you can watch adult movies.
In short, for those movie fans, VCD is a magical product.
"Is this something we produced ourselves?" Ron was quite satisfied with the performance of the machine on the table.
“Yes, with the guidance of Dongda, we completed it in two months.” Ashish was complacent.
Ron sighed. It turned out that the efficiency was so high because of Todai.
"What's your analysis of the VCD market?"
"Boss, the technology and part of the production line are from Dongda, and the process is very mature. We have estimated that if Sur Electric produces it, the cost of each unit will be 4,000 rupees, and the price of 6,000 is appropriate."
“Is this the comprehensive cost, including labor and operations?”
"Yes, the price is 6,000 rupees, mainly considering market acceptance."
Sur Electric's black and white TV is only 4,000 rupees, and a VCD at 6,000 is already very expensive.
Although this thing is best viewed with a color TV, the actual situation in India must also be taken into consideration.
To date, half of the televisions sold by Sur Electric are still black and white, and the proportion of color TVs does not have an absolute advantage.
In order to increase market acceptance, Suer Electric discussed internally that the price of VCDs should not be too high.
This new gadget is not yet popular in India, so it can only be sold at a low price.
It’s not that India doesn’t have VCDs. Imported products from brands like Philips, Samsung, and Panasonic are available, but the prices can be as high as 10,000 or 20,000 rupees.
This results in only a small number of wealthy families being able to afford it, and some ordinary people have never even heard of it.
Under Ron's influence, Soul Electric's marketing purpose is extremely clear, which is to make it affordable for most people.
A VCD costing 14,000 to 15,000 rupees seems to be about the same price as a color TV, but one is a necessity while the other can only be considered icing on the cake.
Their consumption priorities are different. It does not mean that if color TVs sell well, VCDs will also sell well.
If you want to expand the market, the same old saying applies: take the civilian route.
Imported products do have advantages in technology and quality, but Sur Electric's products are cheaper.
If you sell it for more than 10,000 rupees, I will cut the price in half.
What does it mean? The swallows that once flew in front of the mansions of the wealthy and powerful now fly into the homes of ordinary people.
Well, that's pretty much what it means.
Put the luxury items that were once only available in wealthy families in front of the general public and tell them that they can actually own them.
"Yes, this pricing is in line with our positioning. Only by expanding the market can we make money."
"Yes, we are also planning to collaborate with Sur TV to increase our market competitiveness."
After a few years, everyone at Suer Electric has a clearer understanding of its own advantages.
It is difficult to move towards the high-end market, so it is better to focus on the middle and lower-end markets first.
However, the days when a black and white TV could make 100% profit are over.
As the process of globalization accelerates, India gradually lowers its tariff threshold and competition becomes increasingly fierce.
The profit per Sur TV set has dropped to around 80%, and this trend continues.
The total cost of a VCD is 4,000 rupees, and it is almost impossible to sell it for double the price.
It is too expensive and Indian people cannot afford it.
"Is there any way to reduce costs? How is the market at Dongda?"
"The situation over there is confusing." Ashish scratched his head.
"Why?" Ron asked curiously.
"The price of VCDs there is so far below their cost that they're losing money on every unit they sell. Those people are absolutely crazy!"
"Price war?" Ron raised his eyebrows.
"Yes, they say there are tens of thousands of VCD manufacturers, and the market has long been saturated."
Ashish has frequently visited Southeast University in recent years and considers himself quite familiar with the place.
However, the hot VCD market still puzzled him.
For some manufacturers, the cost of producing each machine is 1,800 yuan, but they sell it for 1,780 yuan.
Isn't this crazy? This isn't a monopoly. With tens of thousands of competitors, there's no hope of winning.
Ron was amazed when he heard this. If Sur Electric Appliances had not become a big company, he would have wanted to buy the goods from Dongda and sell them.
Forget it, he doesn't like this kind of quick money, and it doesn't fit the style of his brand.
"Let's talk about CDs. Just having VCDs isn't enough; content is king."
Mentioning this, Ashish became even more excited and he had something to say.
(End of this chapter)
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