Disruptive Cellular Convergence, How Your Startup Options Have Collapsed Around You
China has reduced the cost of a cell phone beyond 10.00 per device. What has this done to the box tracker that only tells you where your vehicle is? It has destroyed one market and created others. Market segments such as “Buy here, pay here” have been relegated to a monthly turnover of $ 1.6 per month. This is not your grandfather’s Cadillac.
It is no longer viable to spend $ 200,000 on software development for backend systems when Chinese manufacturers give it away. You could be spending money right now on a GUI interface system with iPhone apps and it’s already out of date. The devices are no different in cost structure. The one-time cost of a $ 150,000 steel box mold to create can now be purchased for $ 25,000, but copy units are deployed overnight in factories in Shenzhen, China. Recently, Foxconn’s Desmond Koval was quoted as saying “Our prototypes are our most critical resources.” Why?
Development times have been shortened and technology has become a commodity. So why would someone enter space? Why would an investor start to trust patents, source code, or even be an entrepreneur?
There must be smart negotiations, hard and fast sales techniques for strategic selling, and a strong new product model in even the smallest companies. You’ll be driven to innovate faster, create faster, and solve customer problems even with low margins.
Once a profit center for all cell phone companies, residual income from the network is even being pushed to record lows. I was recently negotiating with the head of the M2M department of a US-based carrier, and we had already crushed the pricing structure available to other companies when we introduced our ICinside product line. This has shattered the perception that a daily fee of $ 6.00 a day or a monthly fee to monitor your dog at $ 19.95 is acceptable to consumers. Beware of false projections or false network residual numbers from companies listing clients willing to pay $ 60.00 a month to monitor Grandma. Run backwards.
Having lived in China for almost 8 years, I have seen the ups and downs of the electronic market. Now more than ever, the best thing you can do for investors is show them sales upfront and give them access to your customers. Without it, they will never believe you when you tell them that you can honestly do it without them. Entrepreneur upstairs.
Todd Kleperis, President IContain, Shenzhen China.