John Linton ........reach a point where they can only rise:
http://online.wsj.com/article/SB10001424052748704681804576017883787191962.html?mod=WSJ_Tech_INTL_LSMODULE
...even if they've been continually falling for almost thirty years based on ever more amazing technology developments. I wonder if this apparent change in pricing of one of the world's 'base' products serves as anything other than a comment on some sort of 'bottoming' caused by the freneticism of what was once termed, quite wrongly, the GFC? Perhaps that's all it is - manufacturers continually discounting in the USA (and perhaps other countries) as demand for their products fell and then, approaching Christmas 2009 realising they couldn't sustain that and started raising prices again and switching their emphasis to making, relatively, higher spec boxes.
The Australian residential ADSL industry is not remotely similar to the worldwide PC industry but the business scenarios are almost identical. The main similarity is that suppliers of ADSL in Australia have gone through a long period (well long comparatively to the total time of the product life) and have now faced two orso years of rapidly declining prices per service and a 'sea change' in that the largest provider has gone from being very, very expensive to almost the lowest cost to the bundling customer. Also continual growth which was a given for the first 7+ years has now become either a no growth or slow decline.
The key question for us, is how much longer Telstra Retail will continue with its market share "win back" offers. As far as I can tell, from our daily statistics there has been no reduction in those efforts and, perhaps, even signs of some sort of intensification lately. I think the introduction of the 'fake' PSTN line charge of $30.00 by TPG signals the end of that company's ability to continue its 'toe to toe' efforts to combat Telstra Retail and shows the beginning of a 'mortgage the future' approach to external pressures (marketplace and shareholder promise). None of the current 'promotional' ADSL offers make much sense to me but that is more the sign of a tired/deteriorating mind than a sensible analysis.
So, I don't know what to make of the article I cited. It presumably means something and, to a cleverer person than I am, it may well be useful input to looking at 2011. It seems to fit the pattern of Verizon's newish CEO's recent decisions, particularly his commitment to LTE investment, and similar interesting decisions by other communications companies in the USA (particularly) and in Germany and France (to a lesser extent). However I only use such information on a 'straws in the wind basis' when trying to see where the overall direction of where our very small company should be heading rather than have any relevance to today's product/marketplace decisions.
Whatever anything may mean we now have only three days to complete the changes required to our 2011 business plan and we made very little progress yesterday. My 'right hand young woman' goes on leave at the end of this week so we need to have a very good understanding of what we are going to do with residential ADSL before she leaves. Most of the rest of the plan is pretty much in place in overall terms but it is now obvious that we will have to do the final version in the first half of January.....something I always regard as personal failure. Yet another sign......
Copyright © Exetel Pty Ltd 2010
ABN 350 979 865 46