I discussed this argument several times with my MSB importer (a nice and open minded guy).
Products like the Cascade and I suppose even more the Sentinel are going to become really impossible for many audiophiles and MSB customers. The Select itself with DD isn’t really easy to afford to “normal people”.
Someone has to wait a few years to finally access the used market to let his dreams come true.
Here’s why the introduction of some kind of Long Term Rental options could be an idea to consider in our audiophile world and MSB could be the right brand, young and innovative managers, trusted customers, high end products (value consistency included).
There could be benefits for both the customers and the company.
- More recent products could be available for customers that can’t afford them due to their ultra high price
- Technology runs faster and faster nowadays, so the ability to replace the products after 2 o 3 years with the new ones designed can push customers to move easily the market
- Once the rental period is ended, the life of the product could continue with new rentals or sales of refurbished units
- the used market would be reinforced, with bigger opportunity to let the products circulate for more time (a larger numbers of possible customers)
- The entire process (agreements, insurances) should be driven by the brand - centralized so to speak. The dealers could act as agents.
- A monthly or quarterly payment could push the demand faster, being more accessible to private. And could offer financial (taxes) benefits. Should be studied if also exportations could benefit from this particular contract (against import duties for instance) depending on different countries.
- The entire lifecycle of a product would be longer, accessories like modules/cables etc could be sold in larger quantities along that period, as much as the manufacturer’s support and refurbishment work (generating new business)
- …
Food for thoughts, @Daniel_Gullman and @Jonathan_Gullman?
Luca,
This is something to chew on… and we will. We have actually explored this concept before. What we came away with as the biggest hurdle, is especially with luxury electronics the value can taper off more quickly then say cars or real estate. So you have to recoup the cost quite quickly. Leading of course to very high rental values… much too high. Not to mention adding the insurance and managing the program.
The best thing a manufacturer can do is to try and extend the lifecycle of the product and protect the second hand market. Making it possible for the consumer to try and manage a sale and purchase of new equipment. We have also tried to make our upgrade program as friendly as possible. If enough people demand it, perhaps it will become the future!
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Ciao Luca,
Unfortunately this is a type of service that cannot exist, and there are many reasons for this.
Given that not everyone in the world has access to the same financial services due to population density, the culture of that people or even simply the convenience of opening such a service, you must first consider the product sector you are referring to.
If you buy the latest smartphone with a rental system, you keep it for 12/18 months and then you change it for the next model (and hopefully, even better). But you sell hundreds of thousands of smartphones (millions) and therefore there is also a market for refurbished products, a sales network specialized in products returning from rentals and even geographical areas where these can be resold to continue their life cycle.
So there are those who willingly wait a year or two from the release to still have a “fresh” product with probably 80/85% of the performance in absolute terms compared to the latest new product just released which however costs maybe almost double.
With luxury cars the concept is similar and there are financial companies specialized in offering these operational or long-term rental services because the life cycle of the cars continues even after the first term of the contract (and sometimes even after the second), always finding buyers in the world interested in a vehicle even with several kilometers but that guarantees safety, comfort and also status, even if it is not the latest model.
For luxury homes it depends a lot on the country you are in, not in all of Europe for example is it a concept that can work in the same way because some people consider owning a home the residual value of their future economic capacity, and in Italy we know something about it.
That said, you have to consider (let’s talk about MSB since we’re here) all the variables of the case:
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The products do not reach hundreds of thousands of buyers, so the “end contact” of a rental would be much more difficult to manage, also because the enthusiasts (in 90% of cases penniless ah ah ah) would still have difficulty purchasing a product that initially costs more than 100K USD even after three/four rental cycles, assuming that this is possible.
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This rental should be offered by a third-party financial company that makes a margin on the product and services (when you buy a BMW on rental, even if the financial company calls BMW in the name, it is never the parent company itself, but an independent company connected to it, so to speak …), which sees niche consumer electronics (this is the world we are talking about) as a non-business, there is no point in beating around the bush, precisely because it is a very limited market that at certain cost levels imposes margin percentages for the entire supply chain, from the manufacturer to the final buyer, precisely to amortize these costs (inflation, reduction in the value of used compared to new, management and warehouse costs of the products, sales and resale numbers), which do not go well with an effective business plan in terms of rental.
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Even if the first two points didn’t exist, let’s take a very basic example. If you buy a DAC and a stereo amplifier that together exceed 150K USD, how much would a monthly payment be (for a 36-month contract) considering the product and the additional costs? Let’s say realistically 5,500/5,600 USD? How many could afford that rather than buy a Porsche that at least everyone sees when you go out? How many enthusiasts do you know who are really capable of spending even “only” 2,500/3,000 USD a month?
The best thing a manufacturer can do is to try to keep a product present in the price list as long as possible and offer guaranteed assistance for like ten years from the first marketing, avoid having inflated or unrealistic price lists (where you always know how and where to buy at a fraction of the price, we know how it works and there is no need to be hypocritical) and a selected network of distributors and importers who keep the value of the Brand and individual objects high, so the market alone also holds up the value of used items despite the classic commercial dynamics of each product sector.
My 2 cents.
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It makes perfectly sense! Thanks Alberto.
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