Re: Where have all the Schematics Gone?


G Hopper
 

A great analysis. Succinct and well written.

Sadly, it seems to me that a lot of companies are run by the MBAs and CPAs
that missed that day in business classes. I really enjoyed reading Dennis'
analysis and it prompted my thought that we've seen examples in several
different industries that it doesn't stop there.

It gets even worse for them at the end:
"This creates more competition at the low end of the marketplace where the
profit margin has eroded so deeply that Tek is no longer competitive"

More or less rehashing what Dennis said in order to frame up my
observation: When a buyer no longer sees an instrument as a very safe long
term investment (that continues to have value either being sold as surplus
(or given to employees) or in secondary or tertiary uses as one decides to
buy more or newer equipment) then those buyers start looking carefully at
life-cycle return (which I think is more than simply TCO) and buy gear that
is just good enough for the job and can be rapidly depreciated and
discarded (the true consumption model), so spending a premium for the
higher end gear (even for a lower end use) is a poor choice.

This creates the niche for the entrants at that low end who can produce a
'good enough' product to survive. And once they survive long enough and
become a reasonable choice for the 'cheap' products, they also gain enough
experience to start moving up little by little. Because they can operate
on such tight margins so effectively, they have enough 'agility' to grow
their product line and sophistication. For this to work, their products
don't even need to be great, they just need to be good enough and meet a
value expectation.

Soon they're taking away little bits of market share (in higher, more
sophisticated market segments) from the well known manufacturers, and
because their operation(s) can do this and remain lean, they can afford to
deeply undercut the competition in order to get people to try out their
products (because they're so much less expensive, the risk is close to zero
for the buyer), and many discover that they don't need Tek level products
even for more rigorous uses because the 'Chinese competition's' products
are good enough at that higher level and Tek, HP, etc. loose another sale.
And this happens over and over again. Truly death by a thousand invoice
paper cuts.

I think if you were to tell this story to a Boeing engineer, he might call
it the McDonald Douglas disease. The same shortsightedness has destroyed a
lot of businesses and all for the sake of propping up share prices and
pleasing stock analysts. As Dennis' explanation pointed out, blind pursuit
of revenue is the road to doom. Hopefully some day more business leaders
will learn that.

Thanks again for sharing your thoughts Dennis!

Grant
KB7WSD

On Sun, Jan 26, 2020 at 6:21 PM Mlynch001 <mlynch002@gmail.com> wrote:

Dennis,

You hit the nail on the head!

--
Michael Lynch
Dardanelle, AR



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