Why the price difference?

[Matthew Lochman]

Jim is doing what he has to do.

Jim is doing what he has to do.

An interesting series of video. And a valid response to this thread, I'd say.
http://www.youtube.com/watch?v=9PWXrnsSrf0

 

[Michael Hastings]

RE: employees, etc.

RE: employees, etc.

Jim posted somewhere else that RED has 14 employees, so yes they can probably pay the employees with the reservation money.

You should probably figure that the average initial sale will be at least 20K so 1500 x 20K is 30 million - that is about what Ikegami does annually and I guarantee you they would love to have 1500 orders with deposits on their new HD camcorder.

So far Jim's business model has been brilliant.

that is only the income.
how many people are working at Red ?
How big is the office ?
how big is the risk ? (maybe he has to throw away the first 500 cameras)
26 Mio USD sounds a lot, but the money will find his way - in any direction.
at the moment he is not able to pay his employees with the 1000 usd reservation fee he got.
He will earn his money, anyway - but he does a great job for us with a real
highly risk !

 

[PaulClements]

Pretty simple really. If Red released their camera at 100-200k matching those on the market at the moment anyone that could afford to buy it would go with the tried and tested, even if it was worse than Red. By having such a low price Red will shift far more volume and make as much if they had sold the few at the high price. Their reward is grabbing a large chunk of the market immediately, denting there competitors. From here on in Red has it easy to sell more whereas other companies will have to rethink.

On a more personal level Jim Jannard will make his mark in the movie industry as the man who made digital cinematography an affordable and widely useable format and helped to change the face of independent film-making. And that is likely worth far more than making a bundle of money. Technical Oscars have been given for less, put it that way; I for one would be happy to see them receive such credit if everything goes as planned.

 

[Ken Willinger]

One word... greed.

Asian companies have been price-fixing with one another in order to get their products sold at the highest possible profit. That's why there's a huge price difference between previous camcorders... Red isn't gouging the customer as much.

An interesting outlook. I have wondered for years why the professional (and also consumer and prosumer) cameras have been entirely a Japanese cartel for 25 years. At least in the television broadcast industry in which I have worked for almost 30 years, there have been really only two major players until recently, Sony and Ikegami. Panasonic has in the last 5 years made great strides into the market, but not before Sony effectively crushed Ikegami. So now it is Sony and Panasonic supplying most of the broadcast cameras in the television market today (at least in the US market). There have been some licensed European companies like Thompson (France...but still a Japanese product) but American companies have been out of the picture since around 1980 (RCA).

So you may be right though I don't want to believe it, that there has been some price fixing on the Japanese part, although it seems that Panasonic is really changing the face of pricing for professional cameras recently with the release of the SDX 900, HDX 900 and the about to be released HPX 500, all much cheaper than their predecessors. And I'm sure causing Sony a bit of anguish.

I always assumed that the pro cameras were so expensive because of the limited market and large amount of R&D involved. The same with the accesories...if it's for the professional market, the price gets jacked up.

So I'm extremely pleased to see RED wade into this marketplace with high ideals and what appears to be just an honest desire to create a great product at a reasonable price. Let's hope it can be the HD solution so many of us have been waiting for, a solution that crosses many platforms. And also competition in the Japanese dominated marketplace.

For the past couple of years I've been wondering how to approach my business as a freelancer with clients asking for so many different formats. BetaSP has made a lot of money for freelancers for a very long time. As an owner/operator all the different format flavors makes renting many different cameras a must...you can't afford to own them all...and renting cuts into a freelancers ability to make a living.

I'm looking forward to NAB. Maybe the cartel will be broken. And from the looks of the current pricing for RED, I don't think "gouging as much" applies at all.

 

[Martin Drew]

One word... greed.

Asian companies have been price-fixing with one another in order to get their products sold at the highest possible profit. That's why there's a huge price difference between previous camcorders... Red isn't gouging the customer as much.

I disagree. If Japanese manufacturers have been fixing overly inflated prices then home grown competitors would be more prevalent. In the EU there is currently an anti-dumping levy in force against these same Japanese companies, thats the opposite criticism.

I believe the answer is that the world wide market for high end cameras is currently very small, so unit prices are high (to pay for the development costs). The japanese players have been very competitive within this market model. Jims vision, is to see that if a high end camera is cheap enough he could straddle markets and probably generate new markets. Then he can justify a low unit cost.

M

 

[RED-Tank]

Finally, they can sustain a lot of servicing over the internet, because the machine is basically a computer.

Do you mean a personal-computer that you can upgrade CPU, RAM and add-on card as necessary ? It is super brilliant idea if RED does it for RED-ONE, say we can upgrade CMOS, in-camera buffer, open a slot and put in a new output card for year 2010 technology...

am I back to the day of making my fun DIY PC :-D.

 

[Rogelio Salinas]

RED is going against the grain and providing a high quality product at a reasonable price. Their profit margins will be smaller than some of the more expensive camera manufacturers, but I guarantee that the respect and appreciation will lie with RED, which will allow them to gain positive word of mouth (one of the best methods of marketing) and help them attain a greater market share. In the short run, RED are making some financial sacrifices, but they will prevail in the long run.