Price drop on HVX and all cameras once RED is released?

Right. And it's true, you'll have to wait a few months to see how the camera even ends up. As I stated, there are plenty of us that are willing to do that. :)

FWIW, I think I did a pretty good job of separating the person, Jan, from her company. I know the decisions aren't hers, and I wasn't directing any part of the problem at her - just offering an explanation. It is definitely a case of disruption to the established players' business model. I believe I made that pretty clear too. :) But the fact is, it's happening, and something is going to have to give. Maybe nothing will change overnight. But things will change.
 
Any speculation about the Red camera's disruptive effect on the market is naturally predicated on its delivering on the company's current promises. If Red fails to deliver, it will cause no disruption. (In fact, Panasonic and Sony might be emboldened by a spectacular Red failure to retrench in their current pricing strategies.)

But if Red does deliver the camera they are promising for $17,500, I think there is little question this will disrupt the market radically. A camera that is better than the CineAlta for $17,500? Add on a recording device (which can probably replace a deck in some cases), and it's still an incredible bargain. Why would anyone buy a Varicam or CineAlta with this camera on the market? Even at the same price?

I have no idea what Red's manufacturing costs are, but if Red can deliver a Red One for $17,500 it doesn't really matter that Panasonic can't manufacture a Varicam for that amount. Buyers don't pay based on manufacturing costs. They pay based on what the competition charges.

My guess is that Jim Jannard's plan is to expand the market for pro-quality HD cameras in the same way that Final Cut Pro expanded the market for NLEs. FCP was seriously disruptive in that market. The same year I bought an FCP 1-based system for under $10K, a comparable Avid cost upwards of $100K. Avid was certain that the NLE market was limited to a very definable base of companies--a small base whose size required (and allowed) high pricing. Things changed. Instead of selling $100K technology to tens of thousands of buyers, Apple sold $10K technology to hundreds of thousands.

If pro HD cameras cost what they do today because Panasonic and Sony have, like Avid, grossly underestimated the size of the potential market, then Red is simply stepping in with a correction.

A $50K Varicam suddenly worth $10K? This phenomenon is not unknown in markets in which new technology suddenly appears.
 
The point about Avid is a valid one. There was a time when Avid's cheapest system was $30,000. That is no longer true.

Why would anyone buy a Varicam or CineAlta with this camera on the market? Even at the same price?
Click to expand...

Ah, the question is directly asked. I can provide one possible answer...

To answer, let's look at NLE's (as you did). Frankly with Sony Vegas on the market, I couldn't understand why anyone would buy FCP. Seriously. Vegas was just so much better, so so so much better than FCP in so many ways. And Avid? Puh-leeze. Vegas was a dream to use, Avid seems to me to be patch upon patch upon patch... Vegas employed brilliant architecture, Avid seems more constructed out of band-aids and patches than actual bricks & mortar.

So why would anyone, anywhere, buy FCP and Avid over Vegas?

Yet look at the market, that's exactly what they've done. FCP is gaining market share rapidly, Vegas seems to have lost most of the momentum they had. And Avid, for some reason, is still relevant. Hmmm...

Point is, there's a LOT that goes into a buying decision other than just "Feature Set" and "Price Tag". A lot. If the feature set and price tag were all that mattered, Apple would never have sold a single Apple II and we'd all be running on Commodore 64s and Amigas. And the original IBM PC would have been a complete flop.

There's a lot that goes into a buying decision.

Now, Red is making a lot of promises, and a lot of them sound very good. But guys, thinking "4k" is the automatic answer to everything is exceptionally short-sighted. I mean, look at it like this: if more pixels were the answer, this forum would probably would never have been dvxuser.com, it would have been "pdx10user.com". And Canon would never have sold a single XL1, right? 250,000 pixels -- surely the XL1 was junk, right? And today we'd all be talking about the XLH1 instead of the HVX, which is outselling the XLH1 by a factor of something like 100 to 1.

So -- again -- there's a lot of factors that go into a decision like this. A big-name from an industry may decide to offer his own product in competition with the established major manufacturers, and to do things the other companies won't, yet people still buy the established product from the established manufacturers (I'm referencing John DeLorean here).

So what factors go into a $100,000 buying decision like a VariCam? One would be -- can I get work with this product? That's what owner-operators have been facing. And so far a lot of them have found that the answer is yes. Will they be able to get that same level of work with a Red? Maybe, maybe not -- that's up to the guys hiring them! If the people doing the hiring want a Red, you give 'em a Red. If they want an F900, you give them an F900. If they want you to work on Avid, you don't show up with Vegas and say "but Vegas is cheaper and better!" That won't get you very far (except shown out the door).

Indie owner/operators may change on a dime, but big business doesn't. They may be demanding F900/VariCam for years to come, whether that makes fiscal sense to indie owner/operators or not.

Then there's service & support. Jan makes a point about MII support 7 years after the last product was sold. Car manufacturers do the same thing, they support for a minimum number of years after the last sale has rolled in. Could they do that if they were selling the cars for $300 more than it costs them to make it? Don't think so.

Look, I hope Red is all it's made out to be. I put my money down just like some 400 of you have. But I'm not fool enough or naive enough to think that the rest of the market will just disappear in a vacuum overnight because Red appears on the market. There's a LOT that has to go into it. And the business of being the cheapest is rarely ever an actual good business decision. Customer satisfaction usually comes from being the more expensive product.

(did I just say that out loud? Hmmm, looks like I did).

Who's happier with their cars -- Hyundai owners? Or Mercedes owners? Who leads the JD Powers quality surveys -- Lexus and Acura? Or Kia?

Who enjoys their plane flight more -- the cattle car guys in coach? Or the first class passengers?

I've said this a hundred times on this forum and I'll say it again here -- when working as a video business, cheap customers are the worst customers. They demand the most service, the most corrections, the most help, and they whine. Getting away from the cheap customer was the single biggest factor in elevating my video business. I advise everyone out there who's trying to make it in video to raise their rates and go after a better class of customer, as they'll be happier and their customers will be happier.

Jannard knows this very well. Oakleys are not cheap sunglasses. And he's been very successful at what he does.

Yes the Red is a direct frontal assault on the VariCam and CineAlta. And yes it looks like it has a lot to offer. And yes, based on the marketing and the promises, it does look like it's about to do to its sector of the market (the independent owner/operator) the same thing that FCP did to Avid. And that democratization has got to be seen as a good thing. But last I checked, Avid was hardly out of business! Networks and major production houses all still use Avid. And they'll all still look at the 50-year histories and the worldwide networks of service and support and the track records of companies like Sony and Panasonic, and all that will weigh in heavily in the purchasing decisions of the big customers.

If Red delivers... if it delivers with a track record and reliability, with incredible acceptance among working DPs, and with something other than just more pixels (such as all the wonderful filmlike gammas and texture and performance that we've come to expect from the VariCam/SDX/HVX/DVX) then I think the F900's and VariCam's days are unquestionably numbered. But to go writing off all the existing product out there, thinking Red is going to replace them all? Ain't gonna happen, at least not for several years. The ball is in Red's court, and they've got to prove themselves before they take over the entire world. I wish them the best, but this game is hardly over just because they've announced a miracle product.

Anybody remember Play's Trinity? True believers said a lot of the same things about it, yet here we still are... I am not in any way equating Red with the Trinity (I'm a Red buyer, not a Red basher), but I can see Red bashers saying that a lot of the same sentiments were voiced about how the Trinity was going to revolutionize absolutely everything.

Take it all with a grain of salt, grab a bag of popcorn and watch how it all plays out.
 
Last edited:
It's also worth noting that the specs won't mean crap if the images don't pan out. Look at the Sony Z1 (get ready for a rant people). The camera's specs are pretty impressive with 1080i output and even 24 fps mode. The sad thing is that, to my eyes, it looks like crap. 24 fps motion on the Z1 not only looks odd but also kills the resoltion of the image. On top of that, the colors look way off to me and the whole camera feels very much like sharp video rather than film. Not to mention the badly compressed colors and motion breakup we get from HDV. Specs don't mean everything. The Canon XLH1 has somewhat similar specs (does have a higher resolution chip though) but its HDV and 24 fps codecs work far better than Sony's and produce sharper images with better looking color (once again, to my eyes). I didn't get the HVX200 for the tech specs but because it's images looked prettier than that of any of the sub 10k cameras.

Not to mention that other features aside from 4k resolution and 4:4:4 color space are important to look at. Look at the HVX200 compared to the Varicam. They both use 4:2:2 colorspace and the HVX200 can do 1080p compared to the Varicam which can only do 720p. Nevertheless, does anyone doubt that the Varicam is better? With a highe lattitude, a more sensative CCD, better low light performance, more frame rates, and a variety of other options, it becomes clearly why the Varicam is more. Supporting features are important.

Now, I'm really excited about the Red and hope it's everything it says it will be but it's silly to commit when we have still yet to see a full features list or, more importantly, some images from the camera.
 
very very well said.. i couldnt agree more, that said, i believe people should focus on what kind of work they will be doing, and then worry about what camera to purchase. Just because the RED has 4k res, doesnt mean necassarily that ur projects will be any better. There is so much involved in the whole videography ordeal that personally i dont see how something like the RED could be justified for the indi filmaker or midsized business, unless u have loads of $$ laying around.. , that being said.. im more than happy with the hvx.. :)
 
I think it goes without saying that if the images are crap the specs won't matter. I also don't think Jim Jannard is in the business to make crappy images.

Also, no one has committed to anything yet - the deposits are fully refundable and you can walk away at any time. Those who have chosen to show their interest in a camera system that offers change and alternative to a stale and greedy marketplace have done so.
 
Panasonic and Sony will not have to have price adjustments for at least 3 months after Red is released. It will take that long for pro's and first users to disseminate their opinions. And for Red to solve the first batch of problems. And yes, there will be problems with the first batch, almost inevitably. And how these first problems are resolved by Jannard and Co. will be critical to a quick path into market share.

And add another 3 months while Sony and Panasonic check their sales numbers for the quarter. They'll be crunching the numbers to see if Red/et all are really cutting into sales. If not, no need to reduce prices.....

The game is not so much "price reduction" as "feature addition". New cams will come on the market at nearly the same prices, just with added features and increased resolution. I imagine the Varicam 2 will be everything that Panny can throw at it, and will still sell for 65k+....

Let's face it, we are all thanful that Red and Grass Valley etc are piling into the game, because Sony and Panasonic have been doling out the resolution crumbs as slowly as possible in order to maximize profits. Panasonic could make a tapeless 2/3" chip HVX200 right now. For under 10k, probably way under.

But they won't until they have to. And it's going to be a while before they have to.
 
Zig_Zigman said:
Panasonic and Sony will not have to have price adjustments for at least 3 months after Red is released.
Click to expand...
I would be surprised if we hear of any kind of impact that Red has had before 2007 is over... things aren't going to change overnight. It's also presumably going to take a little while to get all of those cameras assembled and out to the masses. Unlike a lot of the skeptics, however, I do think that if Red is everything that the team wants it to be, it is going to cause some major waves in the industry. I think it is bigger than some people want to give it credit for - Red is more than "just another upgrade."

Zig_Zigman said:
...Sony and Panasonic have been doling out the resolution crumbs as slowly as possible in order to maximize profits. Panasonic could make a tapeless 2/3" chip HVX200 right now. For under 10k, probably way under.

But they won't until they have to.
Click to expand...
That's exactly the problem, and was essentially the point of my longer post on the previous page. I understand that all of these companies make the choices they make based on profit. I'm not contesting that. And while I don't necessarily agree with charging a ridiculous amount for something "just because you can," (I know that when it comes to issues of money my perspective is the minority), the real problem as far as I'm concerned is the holding back of technology (resolution, features, framerates, whatever) to maintain a higher price tag. Charge an exorbinant amount of money for your product if you can get it I guess, but don't intentionally stifle progress for the sake of the dollar. I believe there are still a few companies out there that place innovation and progress on an equal level as profit. Red is one of them. And that concept seems to have been lost in this sector of the business for quite some time.
 
Zig_Zigman said:
because Sony and Panasonic have been doling out the resolution crumbs as slowly as possible in order to maximize profits. Panasonic could make a tapeless 2/3" chip HVX200 right now. For under 10k, probably way under.
Click to expand...

Sometimes things like this get posted and it just strikes me as 1. rude, like talking about someone negatively who is standing right next to you and pretending they are not there, 2. inaccurate, as I know what our costs are and no, we are not gouging customers for the pure profit of it all and 3. if you really think you can make a 2/3" camera for under $10,000, you should try cause I don't believe you can.

If you think being a manufacturer is easy, give it a shot. Don't forget that you have to have people to support and service your product on a world-wide basis. Don't forget you have to market the product after the pent-up demand customers have come and gone. Don't forget that if you don't have new products to make, you will be out of business as the product life cycle is getting shorter and yes, in this I will agree that new features and benefits have to be a part of every camera design. Even if you have the same model number ,it has to be upgraded over time, like the DVX100, A then B.

There is a lot more to the program than just making a camera. There is the rest of the production path that also has to count for something. This is a tough business and I have seen many small manufacturers come, go, get swallowed up by others and then spit out in my over 30 years of being here. I am not saying this is what will happen to Red, who knows, but one of the things that is needed is for any manufcaturer to be there when the going gets tough, and this is not at product introduction time, this is at the post-sale time.

So all of this takes money to support. This is the money that we do make from the sale of products. If you say that the difference between the cost of the product from the factory and the final cost to the customer is profit, then you have a very misguided notion of how to run a business, because you need to have the cost of doing business worked into the plan along with the cost of R & D and marketing, and manufacturing and sales. You may find that some products have to be priced higher because some products have to be priced lower to compete. There is a balance. It is naive to think that Sony and Panasonic are doling out "resoultion crumbs." I know that we, and I cannot speak for Sony, are doing our best to bring the most feature rich, capable product to the industry for the best feature/cost ratio in the business.

Thanks for hearing me out,

Jan
 
Hey Jan,

It's always good when you are here to share your sentiments. I agree with most of them as to why it won't be a slam dunk for Red.

But their weaknesses are their strengths. You have large support and engineering organizations to support. And you basically said that is builit into the prices of your products. Red doesn't have this.

As to whether you want to debate the phraseology of "resolution crumbs" LOL well that's okay too. My opinion is that you guys came up a bit short on your HVX200 chip resolution. And I'm a customer. Generally speaking, I don't think it's a stretch to say HD prices are artificially supported.

Anyway, my other point was that Sony and Pannasonic do not have to respond to competition for at least 6 months. And if Sony and Pannasonic sales figures are not affected, they won't have to lower prices at all.

We'll see how it all plays out.
 
"I don't think it's a stretch to say HD prices are artificially supported."

It would be interesting to learn what the actual cost it is to produce the Panny and p2 cards, etc.
 
David S. said:
"I don't think it's a stretch to say HD prices are artificially supported."

It would be interesting to learn what the actual cost it is to produce the Panny and p2 cards, etc.
Click to expand...


We would need to define actual cost, R&D, Design, Raw Material, Manufacturing, SG & A, Tax Policy and After Sales to name a few. Having consulted for manufactures, large OEMs and CEM's, it will be all about scalability for Red. (I don't know a great deal about the company other than it is miniscule in size compared to its competitors) General rule: It's one thing to have a great idea, even a great design; it is entirely another thing to execute on it. Nascent companies with a great deal of capital have had great difficulty executing on a large scale,(witness AMD until recently, transmeta R.I.P. in their quest to gain share from Intel). The migration to contract manufacturers (Flextronics, Celestica, Solecton ...) by the big guys, Panasonic included, have made competing on cost very difficult, not to mention QC. I would imagine a new company would need several strategic unique partnerships on the supply chain, manufacturing and disty channel level to have any chance competing in this case.

It is not impossible and I do wish Red well. Pushing the envelope is never a bad thing. I also hope Panasonic makes a fortune on the HVX, it will encourage upgrades and stronger support for the product line.
 
Last edited:
David S. said:
It would be interesting to learn what the actual cost it is to produce the Panny and p2 cards, etc.
Click to expand...

Why? What possible relevance can it have, other than to have people carrying torches and shouting "ripoff! ripoff!" ?

I mean, what is the actual cost it costs Warner Brothers to make a DVD? In the quantities that they make 'em at, I would imagine their final cost is maybe, at most, sixty cents. How does that factor into the pricing of their product? Not at all, really. They're still going to put new releases at $19.99. You won't find them offering their latest films at a dollar (which would be a 50% markup, right?) because that just doesn't work. It doesn't factor into the business model at all.

It's like a restaurant -- what's the actual cost of the food itself? Pennies. It's the labor and the advertising and the rent on the facility and all those things that go into making restaurant prices so high. And yet if anyone thinks opening a restaurant is an easy path to riches, well...

Or, let's put it another way -- what's the actual cost for a shooter to shoot a day's worth of video? Nothing, really. Maybe a trip to McDonald's in the middle of the day. So why shouldn't you shoot video professionally for $10/day? Cost of goods is one of the least important factors when looking at the overall business plan. It's a factor only if it's excessively high.

I agree with Zig that Red probably won't have all those other expenses. But that doesn't mean it's a path to instant domination -- it is specifically because they don't have those expenses that you probably won't see the BBC and NBC and CBS and National Geographic and all the major content producers shifting over to Red exclusively. It is that support infrastructure that makes things work, and companies like that need to have that support infrastructure in place. But then, I don't think Red is aiming for that business anyway, I think they're aiming for individual owner-operators.
 
For a tangible product (like a camera) I seriously doubt that profits make up more than 15% of the wholesale selling price (I am referring to the fully burdened manufacturing cost versus the wholesale selling price). Anything above that would be atypical in a real world business model.
 
Jan_Crittenden said:
Sometimes things like this get posted and it just strikes me as 1. rude, like talking about someone negatively who is standing right next to you and pretending they are not there...
Click to expand...

Er, Jan? The comments were not about you personally, but about a company.

And as someone who recently attended a Varicamp and listened to Panasonic Product Line Business Manager Jeff Merritt dispensing large amounts of FUD directly at Red and Sony, I have to say that Panasonic is in no position to play this 'you're being rude' card. (Again, I'm speaking about a company here, not you personally.)

The "rude" comment is doubly ironic considering there was some not-so-subtly worded FUD in your own post:

This is a tough business and I have seen many small manufacturers come, go, get swallowed up by others and then spit out in my over 30 years of being here. I am not saying this is what will happen to Red, who knows...
Click to expand...

The owner of Red, as we know, is 'in the room,' so to speak. Is public speculation about the demise of his company "rude"?

I think the comments in this thread have been quite well-mannered and on point. As buyers of production equipment we all have a healthy skepticism about the strategies of companies. Our relationship to those companies has a natural adversarial component to it -- they want as much money out of us as possible, we want to pay as little as possible.

The intriguing thing about Red is that it is apparently trying a new model to make a profit -- to sell lots of feature-rich pro cameras at a low margin, instead of a small amount at a high margin. Naturally, as buyers we're all cheering on this development. It's not "rude" to talk about this change in strategy, why it is occurring, and how we will benefit.

For the record:

1. I love my HVX200. I think Panasonic created an excellent product at a fair price.

2. I have nothing against you personally and never have.

Both of the above being true, I'd like to have an uninhibited conversation about how prices on higher-quality HD cameras may be coming down to the point that I can afford to own one. If you'd rather this conversation not occur, I understand, but I don't think it's appropriate to play the "rude" card to inhibit it.
 
BrianF said:
The intriguing thing about Red is that it is apparently trying a new model to make a profit -- to sell lots of feature-rich pro cameras at a low margin, instead of a small amount at a high margin. Naturally, as buyers we're all cheering on this development. It's not "rude" to talk about this change in strategy, why it is occurring, and how we will benefit.
Click to expand...


this is not a "new model," major manufacturers many times initially sell their product at a loss to gain marketshare and then have a low margin attrition game plan. (The xbox at its introduction has been a recent example.) It is difficult thing to maintain margins in the retail space. This conversation would be exhibit #1 as to why. I think there is a general assumption on margins here that is incorrect. Look at the, in my mind, nominal difference in price between the HVX and DVX for what you get. The DVX price has been vetted by the market for quite some time now. There is strong competition from Sony, Canon and JVC. I guess you can argue collusion and price fixing if you think prices are artificially high, but I dont buy it.

If Red's end game is a low margin high quantity model vs. Panasonic, Sony, JVC (which I sincerely hope it is not) it is not "FUD" (misinformation) to question any new companies scalability challenges. Again, I hope Red works out, choice is a good thing and the challenges they face can be managed.
 
Jan_Crittenden said:
If you really think you can make a 2/3" camera for under $10,000, you should try cause I don't believe you can.
Click to expand...
With all due respect, your company already has one. The AJ-SDC615 retails for $9,995 - and that's the selling price, not the manufacturing cost. As has been pointed out, most of the upgraded models (in your line, as well as many of the competitors') are software upgrades and not physical ones. And certainly, the cost of developing that software and enigineering the cameras to utilize it plays a part in the cost it takes to produce the camera. But charging $6,500 for the "privilege" of being able to use 24p from one model to another is not justified, in my opinon.

Of course, Panasonic is their own company and they can set prices how they like and charge whatever they want. When there isn't a decent alternative, there isn't much a customer can do about it. Now that alternatives are emerging, however, I believe that a lot of that inflation is going to have to be addressed or people will buy something else. And like many people have pointed out, the effects of that probably won't show up for a little while. But change is inevitable either way.
 
BrianF said:
Er, Jan? The comments were not about you personally, but about a company.

The comments were about my company and as a representative for that company, I take jabs that we are gouging for prices and not offering value for the customer seriously because I believe we do off value for the money we ask. I do know the landed cos in the US and I know what the profit structure is because I get to set the prices, within a group of people. I know that every product is not priced the same because some have to support others, but I also know what it takes to support the product. I know how many emails I get per day, and phone calls and such, and the same is true for virtually every Panasonic person.


I have to say that Panasonic is in no position to play this 'you're being rude' card.
Click to expand...

Frankly if I had been there I would have called Jeff on it. It isn't appropriate. Still that is a small room with 20+ people, this is a forum with 100,000 visitors a day, a little different.


The owner of Red, as we know, is 'in the room,' so to speak. Is public speculation about the demise of his company "rude"?
Click to expand...

But I didn't say his company would fail and if he is in the room then he can speak up, but this is in the HVX forum and not in the Red Forum. You may notice that I do not post in the Red Forum and if this thread were going on in the Red Forum, I probably would not have joined in, heck I may not even know it is taking place. But it isn't in the Red Forum it is here.


I think the comments in this thread have been quite well-mannered and on point. As buyers of production equipment we all have a healthy skepticism about the strategies of companies. Our relationship to those companies has a natural adversarial component to it -- they want as much money out of us as possible, we want to pay as little as possible.
Click to expand...

See I don't see it that way. I see that we try to put together a product that will have the right features and be able to bring it to the market at a price you are willing to pay for it. And if we have done our homework right, you are willing to buy it and if not, you don't.

The intriguing thing about Red is that it is apparently trying a new model to make a profit -- to sell lots of feature-rich pro cameras at a low margin, instead of a small amount at a high margin. Naturally, as buyers we're all cheering on this development. It's not "rude" to talk about this change in strategy, why it is occurring, and how we will benefit.
Click to expand...

That was not the rude part. Note that I have been in the conversation. See the part that I quoted, that was the part that was rude. The rest of the conversation isn't.


Both of the above being true, I'd like to have an uninhibited conversation about how prices on higher-quality HD cameras may be coming down to the point that I can afford to own one. If you'd rather this conversation not occur, I understand, but I don't think it's appropriate to play the "rude" card to inhibit it.
Click to expand...

I have been in this conversation for the last couple of days and didnt get to the rude comment until, it was pointed out that we, Panasonic were just parsing out lower quality product so that we could maintain the profit structure of the higher performing cameras and that we were in essence gouging our customers, which I know is not true. That struck me wrongly and perhaps I should have just let it roll off my back. No I don't mind this conversation and I don't see that the HVX will be impacted by the Red Camera at all. I am not sure that the Varicam will be. Time will tell.

Best,

Jan
Click to expand...
 
You must log in or register to reply here.
Back
Top