OK, someone help me with this. I frequent the ReplayTV forum a bit, and it occurred to me the other day that one can now purchase a ReplayTV 40 GB HD model for around $330 (after rebate). It would also appear that the yet to be released ReplayTV models (the 5xxx series) will come in at an even lower price point.

My question is this: Why the HUGE price difference between a ReplayTV unit from SonicBlue when compared against the RioCentral? Let's start by taking the 40 GB HD ReplayTV unit (the 4504 I believe) of $330. OK, add another $50 for CD-R drive, another $250 for the LCD screen, and another $300 for the "stereo guts" and you still only come to $880, which is almost half of what SB is asking for the RioCentral. I realize there are some programming costs for the RioCentral, but there are similar if not more extensive costs for the ReplayTV units (even if we add the $250 lifetime subscription fee to the above hardware price we still only arrive at a price of $1,130 -- a price $370 lower). So what am I missing here. Granted (as somone mentioned on www.avsforum.com SB has some sort of "frame of reference" or competitive pressure upon which to price the ReplayTV units by (Tivo, UltimateTV, DishTV), but how many RioCentrals can they REALLY be selling at $1,500?

I've got to believe that this product would sell at a much increased rate if they would offer it at a more rational price point, such as $799 or $899 -- that is assuming they can still make money at that price point (sunk costs asside).

Thoughts?

Understanding the motives behind some of the marketing and pricing decisions made by SonicBlue in recent months would require an omnipotent being, I think.

Who knows why they do what they do? I agree that the Rio Central is expensive, I'm sure the people who developed it think it's expensive and were hoping it would sell for less. I agree that pricing it high will preclude a large number of sales. But trying to just add up fictional component pricing and then second-guessing their sales and marketing people is ultimately self-defeating. There's no way we'll ever know.

I will say that it's worth it, just like the equally-pricey Empeg Car is worth it. But unless you own one or you have had a chance to use one extensively, you don't see the value.

Your comparisson to the ReplayTV is one I never thought of before. Yes, SonicBlue has TiVo to use as a price benchmark for the ReplayTV but HP can be used as the benchmark for the Central. I am talking about the HP DE100C that is now defunct. It had a VFD display and a burner. It is now sold as a Compaq piece for $399, but I don't think it has the display anymore.

The HP DE100C sold for $999. It used an off-the-shelf Celeron with a plain PC motherboard. On the Central, everything is custom... not just a hacked-up PC. The display is also more advanced. But you're right.... Do those features deserve a $1500 price tag? I personally don't think so.

I thought about buying a central really hard. In the end, I couldn't justify the cost. At your estimated "reasonable" cost of $799 or $899, I would have bought one. No question.

It has to do with relative volumes, and a whole bunch of other issues that I don't even want to think about if I can help it.

Rob

I'm not sure how speculating is "self-defeating", as that would imply that there is something to be "won" here . . . I was merely positing the question to get some ideas as to why SB would've priced the RioCentral at such a high price point, as I know that I don't know enough to really "know" why they did what they did. The reason I was trying to get an idea of why they may have priced the RioCentral so high was that I was hoping to be able to discern if their pricing strategy "left room" for lowering the price on the existing product, or whether or not a significant product re-design would be necessary in order to offer it at a much lower price point. To date, the feedback or ideas I've gotten suggest that indeed, SB could probably lower their pricing to somewhere in the sub-$1,000 range on the existing product (at least that's my inference from the information shared so far, YMMV).

The "volumes of production" assumption is an interesting one. I work in a mfg environment, and such assumptions can become self-fulfilling if there are substantial R&D costs to be amortized over the production run, or if there are significant savings to be had by buying certain products in bulk. It would appear that due to the at least somewhat proprietary design of the RioCentral -- both from the hardware and software perspectives, that there are probably significant R&D costs that require amortization as well as (most likely) less of an opportunity to get "price breaks" on hardware from suppliers on proprietary or low volume hardware (such as a processor -- what chip does SB use in the RC anyway?). The catch is, if you make HIGH production run assumptions, the amortization of R&D on each unit becomes smaller, making the "profitable" selling price lower. If you make LOW production run assumption, the amortization of R&D on each unit becomes large, making the "profitable" selling price higher -- resulting in a somewhat self-fulfilling "prophecy" on production run assemptions (and price point).

Not to get too obtuse here, but Economic Theory tells us that producers should produce up to the point where variable costs equal variable revenues. So assuming that R&D costs are "sunk" and therefore no longer variable, SB should be selling the unit at hardware cost + profit. Then again, if one takes Marketing Theory seriously, SB should determine the "value" the RC provides and charge accordingly for it, working backwards to decide what an adequate profit is, and therefore what acceptable profit levels are . . .

God, did I just say all that crap out loud? Ooops, sorry. This is my second "Grad School Regurgitation" slip up . . .

I absolutely agree! I think the price for the Central is just ridiculous. I use 2 Rio Receivers that sold at a great price and I always had plenty of responses to people asking why anyone would not just use a PC instead... The Central would be nice, but for 1500 it really IS much cheaper to buy a PC, even a notebook would do and not take much more space - but have a much better screen. Before shelling out 1500 bucks for the Central with a 40G HD, I would much rather do that!
I think discussing things as price here is not such a bad thing, since we ultimately deal with the technical side here mainly and those guys who have come up with these incredible products are totally dependent on the marketing arm of the company as far as sales are concerned. The one thing that we all want to avoid, I believe, is that the Central dies as fast as the Rio Receiver did!

Can't say for certain when it changed, but SB has dropped the price of the RioCentral to $1,149 on their website. Who knows, maybe this is a "test" of sorts to see how many folks will buy at that price (although, I must admit, I didn't realize they dropped the price until I read it on another forum -- so this seems to be an un-advertised price) OR perhaps SB is coming out with the next generation of this unit (which will presumably be cheaper ala the RTV units) and they're trying to unload the existing units. $1,149 is CLOSER to what I'd pay, but not quite "there" yet. With the drop in HD prices, I'd expect the target price (mentioned in my first post) of $1,130 to drop. Perhaps something closer to the $850 range for a 40GB HD unit.

I wonder if the coupon is any good at the top of this page
http://www.diamondhome.com/dhm2index.html

I filled out the form but haven't gotten a response. I am really tempted for 980.00

I am talking about the HP DE100C that is now defunct. It had a VFD display and a burner. It is now sold as a Compaq piece for $399, but I don't think it has the display anymore.

Actually the HP and Compaq units are different boxes. Both were developed and released before the merger of the two companies. I saw most of the HP units carried in retail stores like Best Buy, and most likely HP simply stopped making them, and let the resellers do whatever with them. The Compaq unit pretty much disappeared after they liquidated it at $400.

I'm guessing that the RePlay business plan has 2 other factors.. 1 being market share (ie, having competitive pricing to TiVo even if it means selling at a loss) and 2. subscription revenue.

I know that in the US, Ford lost money on each Escort is sold because it was more important to investors to show they had market share (esp. for an entry level car that might create brand loyalty for when the person "moves up" to an SUV.) As long as there are more Escorts selling than Caveliers, the investors are happy. I could see how this might work for RePlay (brand loyalty) but there is really no compeition for the Central.

But perhaps the biggest differance is the subscription fees from what I can guess. Even if you've been selling hardware at a loss, you can make it up over the years with revenue from the monthly fees. (Remember when the RePlay had no fees but cost more to buy?)

While we're on the topic, the only reason that I havn't purchased a Rio Central is because my empeg works so great when it's hooked up to my home stereo (or anyone's stereo for that matter). I can sit anywhere in the house w. my 802.11b enabled notebook and control what I'm listening to. I guess I prefer using EAC w. Lame also. Guess that empeg was designed too well!