Advantage?

[Corey Sturmer]

Are these companies taking advantage of their consumers? Why are these things so incredibly expensive. I have my mind set on buying one this summer, but it makes me wonder...These devices are only a few hundred bucks less expensive than my camera itself (GL2). This doesn't seem like mind blowing technology, will these prices go down?

[Ken Tanaka]

Corey,
No, I don't believe that current price levels reflect unmitigated opportunism. What you're seeing is the early days of this technology. Certainly the prices will drop to various brackets as adoption rates in various markets rise. We fully expect this to occur in the coming years, as evidenced by our establishment of a discussion area devoted to these devices.

To a great degree what you're seeing across the current product lines is the influence of two factors; the manufacturing economics of small companies and value pricing.

Small companies, the vanguard of products in this category, face some very expensive hurdles in developing, manufacturing, marketing and distributing new products. They do not have substantial standing capacities in any of these categories from which they can leverage economies of scale. In particular, they must generally subcontract component manufacturing and assembly. As with anything, smaller quantities produces higher unit costs which must be factored into product pricing.

On the other hand, companies like Sony (which has offered a relatively pricey direct-to-disk product for some of its professional cameras for almost two years) that have substantial expertise and manufacturing capacity use different models for establishing pricing. They look at the economic value that a product will offer to prospective customers. In this case, the benchmark is the labor cost that broadcasters and other producers can avoid by eliminating the time-consuming chore of capturing tape to disk. This is something that their sales and marketing staffs can sell hard. The price of the cameras to which the devices are attached is, to a great degree, immaterial to these economics.

Of course as consumers considering the adoption of this technology we often look at the cost relative to our cameras (and to our personal resources). This is ultimately the pressure that will drive pricing in the consumer segment of this market to more attractive levels.

Gee, I didn't mean to sound like Greenspan or to be a spokesperson for the DTD manufacturers. But these are the forces at work in this market right now. Be patient.

[Corey Sturmer]

Thanks, Ken. Fortunatly, I cannot purchase anything until I start working this summer, so by the end of the summer, hopefully the prices will have gone down.