RED's business model?

S

sndrk

Member
...and another thing: how much sense does this make as a business model? As said in the forums most people will not even use 4k in the beginning because computers, screens and projectors need to catch up first - you wouldn't even be able see what you've shot in all it's 4k glory.

So you don't need a new camera for the next few, maybe even 10 years. What's Red going to do when the market is saturated? An 8k camera with 70mm chip? Or move to consumer oriented cameras? Or is the market so big that RED will be happy manufacturing away? What if Sony and Panasonic come out with a cheaper 4k camera? Why doesn't RED make a 2k camera first?

Don't get me wrong, I love the idea and very much support it even if just for the sake of doing it so keep up the good work!
 
Red is being produced in an unconventional manner. First of all it is trying to be all things to all men... which often in any industry can be a bad thing but from the looks of it Red is doing a good job so far. How are they being unconventional? Unlike the panasonics and sony's of this world Red isn't about making a camera that you need to replace after a couple of years. It's about building something that can be updated and modified to better suit the user over time... this is very unconventional because it means that Red cannot make money on a second camera just as you suggest with the 2k THEN the 4k camera later.

The truth is that if they wanted to they could sell Red for a hell of alot more. Prolly $100k+ easy. The fact that the price is something accessable to typical users and not high end users is what differentiates this camera from the others. If Panasonic and others release a camera that is better and for a similar price then it's only good news for us consumers. If Red made a 2k camera then it would mean that there would be less pressure for other companies to compete. But if Red don't make this camera then 4k camera's and even 2k camera's will remain the objects of production companies at very expensive prices.
 
"Renders obsolescence obsolete"

I agree that most will not start off shooting in 4K. I myself am planning on using no more than 1080p for most projects, at least initially. But that's the thing that makes this camera so good - I can grow and develop my workflow in concert with expanding PC technology, WITHOUT obsoleting the camera. That's a big deal. Add to that its modular design and you have a camera that can stay with you for a decade and still be cutting edge as far as footage goes.

I think the business (and marketing) model is a good one, because it is as much about building a community of filmmakers not stuck with an old way of working as it is about making a high quality camera at an affordable price not previously seen. Those investing are the ones most likely to be thinking outside the square, as it were, and IMHO it is those people who will be making the next wave of breakout films that come from (seemingly) nowhere to establish a new set of names in the industry. Well, I sincerely hope so (and am working towards just that) since I want to be one of them :)
 
Yes, yes, I understand it is good for us, the buyers. But how can that be good for RED and what's going to be the future of RED? Anybody know of an example of a company that came out with a product that was better and cheaper than anything existing?
 
Not sure how much this applies to RED but I read somewhere that Sony will be taking a huge loss on the PS3 in terms of profit due to initial operation costs and the implementation of Blu-ray. Similarly, I think RED may initially take a hit on the camera itself..but could make profit back from the accessories and RED drives. Perhaps, when the speculation is over, RED could make profit back in sheer volume of sales. Some fear that the price may go up on RED due to demand.

All guesses on my part
What's Red going to do when the market is saturated? By the time that happens a large Red user base will already exist that will likely upgrade the sensors on their cameras when the time calls for it. I have no clue how many red users there will be say 5-10 years from now...but every single one of them will likely upgrade their sensors if the standard changes to higher than 2540p (which probably won't happen for a loong time). I'm also sure their will be different versions of the RED body in the future that will implement some innovative features.

What if Sony and Panasonic come out with a cheaper 4k camera? I still wouldn't buy them because they likely won't be modular like the RED..therefore no upgradeable sensors.

Why doesn't RED make a 2k camera first? Because the sensor he is using does 4k. No sense in pouring devlopment into a camera that does "only" does 2k and have it become obselete in a few years. Not only that, but shooting in 4k and converting it to 2k will produce a much better footage than shooting straight 2k.
 
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It's good for RED because they are trying to gain market share. If you are a new player in an existing market then to penetrate that market you have to differentiate on price and/or performance. RED is doing the double-whammy with low price and high performance. Depending on the business plan, this initial push into the market may be a "loss leader" where you actually don't make any profit (or maybe are even selling at a slight loss) in return for gaining market share (like some gaming consoles).

The problem is no one really knows if this is the case without knowing the company's cost structure and R&D amortization schedule and the only people who know that are the company insiders. So really, it's futile for us outsiders to figure out what RED's business plan is.

But it's fun to speculate (as long as you remember it's speculating) and you can get some clues from other industries. Southwest Airlines' business model is based on low prices and high performance. AMD took market share away from Intel with lower prices and higher performance. But in a lot of these industries, especially tech industries, you will notice that eventually the low prices creap up until it stabilizes at a point where most competitor can still maintain market share and a healthy profit. But I'm not saying the RED price will go up. I don't know what will happen. If I could predict price action, I'd be playing the stock market instead of posting on DVXuser :D

To some people profit is a dirty word but really it's a good thing (unless you're an oil company making $10.7 billion in profit in three months which is just obscene). Profit sustains a business and funds R&D for new stuff. A couple of examples are Canon and Garmin. Both these companies constantly innovate and turn out new products because they make crazy amounts of profit. The question then is RED going to make a profit? Only they know. But common sense says they need to eventually in order to sustain the business.
 
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Well, why do I care about Red's business model? Because for a lot of people, like me, this is a major investment and one that is going to change your life. Essentially I will be tied to this company that has no record. Some people seem to think that Jannard is some kind of crazy guy who just wants to give us the best camera possible for the least amount of money - and maybe he is!! But still we're dealing with a company that needs to make profit so how are they going to do this?

Is the Red camera an investment to win marketshare? Will service and spare parts be expensive once you're tied to this system? The reason Sony sells the Playstation for less is that they make profit on the games they sell. So where are Red's 'games'?

My hope is actually that Red is driven by a will to change an industry. Sometimes that happens - come to think of Easyjet in Europe. Industries often do things in a way not because that is the best way but because that's the way they are used to do it. It takes an outsider to change things radically. So is Jannard a Henry Ford, a Stelios, a Steve Jobs or a Bill Gates? And which one would you guys prefer?
 
Essentially I will be tied to this company that has no record.
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Exactly. If that bothers you, then don't buy the camera. It won't make you an instant success, or provide directorial/production/DP talent by the bucket loads. It is a tool that will (if delivered to specs) provide choices, both visual and business-wise.

Knowing their business plan is only relevant if you are going to invest in an IPO. It won't give you a reason to buy unless you already have one, IMHO.
Or do you think all business plans are written in stone ?

RED is providing a camera that will adapt quicker and give more bang for the buck than any other on the market (if it delivers). There is always an element of risk (no matter how mitigated by the parties involved) in purchasing any new product from a new company. If it makes you uncomfortable then don't buy until they are established and have a track record.

Just my 3 pence. :beer:

Cheers.

RED # wish I was higher
 
I think an analogy to computer chips might explain what is going on.

Chip makers know that what their customers are willing to pay for a chip is spread out over many different spending brackets. Some will pay $1,000 for super speedy chips while others just want something that works for $100. The process for making chips of different speeds is usually the same, however. Due to microscopic defects some chips can only run at slower speeds and are sold to customers in the lower bracket while ones with less defects can operate at much faster speeds and can go for $1,000. As company tweaks their process, however, more and more of the chips have fewer defects and can be sold at the 1k level and they don't have any to sell in the lower bracket. They don't just sell their speedy ones at a lower price though, because then no one would have the incentive to pay $1k and they would be losing money. So what they do is artificially LOWER the speed of the faster ones and sell them in the bottom brackets so they can still sell the un neutered ones for 1k. We know this happens because if you are willing to void the warranty on your $100 CPU you can often "overclock" it to the speed of a much more expensive one.

Now I'm not saying this is for sure what happens in the camera industry but it certainly seems possible. If technology progressed and Sony found a way to include all the features of the F950 in a 15k camera would they do it? Nobody would buy an F950 anymore and they would have to sell 7 of the 15k cameras to make the same amount of money as they would on one F950. So they would just release the 15k camera with enough features stripped away that the hard core people would still want to buy the F950.

It would take a company like RED with no hi end to protect to come in and offer the camera at the price it was actually worth.

Again this is only one possible scenario and may be totally off base. Just food for thought.
 
any "new" product like RED (product & value for the $) has a new "business model"
you're either a believer or non believer ...for some they jump in with their $1000 ( in this case fully refundable) and go for it .. others will wait to see what to decide when it comes to market and either jump in or wait till RED's business model is proven (3-5 years down the line) then jump in ...
the choice is yours ...

" this is a major investment and one that is going to change your life. Essentially I will be tied to this company that has no record. "

not so sure what you mean by change your life ?
is that because of debt you'll taking on will change it or the camera is going to change your life ?
if this is a "investment " to you - then do consider the Risk vs. Reward very carefully ... remember it isn't the camera companies hire it's the persons behind it or if you make your own movies it all falls on you not the camera ...

IMO you are not tied to any company - you buy a product - it doesn't meet your expectation or lets say you never get any work from it or something pops up out of left field = you sell it ... and as with most items you buy it will sell for less then you paid ...
if you have a higher then 300 reservation # then you'll know from the 1st 100 if there are problems and if 200 is still having problems you simple get a deposit refund ...

ALL camera's need maintenence/adjustments etc .. you don't take care of it you're more likely to have some problems ...
 
sndrk said:
...Well, why do I care about Red's business model? Because for a lot of people, like me, this is a major investment and one that is going to change your life. Essentially I will be tied to this company that has no record...
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The company's history is completely irrelevant. The people who make up that company are not. They have great track records and both Oakley and Jim have extremely deep pockets.

Worries about RDCCC making a profit are absolutely ludicrous. Its been proven for over 30 years that building solid state devices is modelled after the printing industry. Higher volumes = cheap like borscht!

No one is breaking anyone's arm to buy a Red One. If you think a Red looks expensive to you, then don't buy one. I spent thirty years not owning a 35mm cinema camera. Big deal. Never stopped me from shooting anything. Spend your energy doing something you love and if you do it well, the money will look after itself.
 
We're moving into the age of products focused more heavily on user interface rather than products focused solely on having the most features.

There's always going to be a business opportunity for innovation in the user interface (i.e. - friendliness, ease of use) of electronics. Just look at the iPod. It isn't the most feature packed music player, but it has the best user interface. The masses have spoken. Consumers do not want an AM/FM radio, voice recorder, or a full fledged daytimer on their MP3 players. All they wanted was something that was easy to use.

I believe there is a need for easy to use cameras, too. There is also a need for advanced features that are easy to use, not complicated and difficult to learn. I mean, honestly, should you really a NEED to take a class on how to work an HVX200? Wouldn't it be great if these cameras just created a good picture out of the box without having to tweak the Master Pedestal or lower the edge enhancement? Wouldn't it be nice if a camera had only six buttons on it and no menu's? I think that would be fantastic. That's the kind of camera I want to have.
 
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All valid points, really. But I don't think anybody has answered the question how it is possible that RED can deliver a camera that, as far as I can tell, is 1/5 of the price of a system with similar capabilities. Is it technological advancements that have been kept away from us by the big companies? That kind of makes sense since you can buy a 10 megapixel still camera for a few hundred dollars, so why can't you buy a 10 megapixel video camera for a bit more?

I don't NEED to know these things but it is just nice to think about it, probably only time can tell where RED is going. And yes, it is a major investment for me that will change my life, is that so strange? And maybe I could sell the camera if it doesn't work out for me but what's the alternative? No camera?
 
Hi Jim! Well, to be honest I wouldn't know. Maybe cameras 5 times the price still don't come close to what the Red camera can do. But that makes it even harder to understand!

Can't you say something about what thrives you? How do you do it? If it is possible to do it the way you do it why didn't any body else do it? Or why do the big camera manufacturers give us something better for less money?

Sander
 
"And yes, it is a major investment for me that will change my life, is that so strange? "

no ... ok from where you are sitting it is a MAJOR investment - it is BIG $$$ ... you want to make sure this camera works ... we have a unheard of company not in any way connected to the film- video industry .. so i think we ALL can understand the questioning of how can a new company do something that sony, panasonic,grass valley etc can't and for that matter those other manufacturers current top of the line models at $100K and up can't do what the RED is proposing?

when i asked sony, panasonic at NAB back in 2004 why they didn't have a 35mm size sensor -
sony stated they have never had any request for it and they just don't see a market for it ..
Panasonic was more along the lines the technology isn't here yet and it would be cost prohibitive for some years .....
both company's have a VIDEO background .. their high end cinema camera's are both HD .. 1080p for sony .. 720p for panasonic .. they look, feel, operate like a video camera !!! my guess is panasonic will come out with a 1080p to replace the variCam ?? i don't think either company will come out with any camera above 1080p until TV goes beyond the current HD formats ... their business is VIDEO ...

i don't question how RED can do it for X $$ ..

IMO if you have question about the company you should research Oakley sunglasses .. i believe Jim J was told you can't do that and make $$$..
 
sndrk said:
Can't you say something about what thrives you? How do you do it? If it is possible to do it the way you do it why didn't any body else do it? Or why do the big camera manufacturers give us something better for less money?

Sander
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there is another part of the equation as well. Ive been to most of the big companies headquarters, or district offices, and at each office there are hundreds, if not thousands of employees at each location.. someone has to pay these guys salary, build the buildings and pay the power.

Thats not even taking into consideration the poor guys down in Japan engineering these things, all the tooling they do and R&D.. it adds up.
 
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