You have someone as big as Google as your partner. Your product is promoted as the best thing since sliced bread. You then launch your product for $299 with a lot of fanfare. Unfortunately no one buys your product. The early adopters who bought it also returned it promptly. You wait for sometime, but then, there is no sign of the product picking up and so you drop the price to $199. People now feel that it is a good value buy, but still hesitate to buy it. Your inventory is growing. You want to clear it and so you drop your price to $99. Result? Magic happens. Every single retail store in the country sells out the product in minutes. Your product raises to number 1 best seller in Amazon, a remarkable feat in itself. It is backordered everywhere with an estimated delivery of two weeks.
The product in question is Logitech Revue with Google TV. Nothing but a internet media streamer. If you look at it, it seems like pricing was the only thing that kept people away from the product – despite all the complaints of a half-baked Google TV software. By dropping the price to $99, Logitech has matched the price of the Revue with its primary competitors – Roku and Apple TV. Roku offers much more than what Google TV offers at a fraction of Revue’s original price. Apple TV offers less, but it is polished and works nicely within the iTunes ecosystem. The market automatically reacted when the pricing matched what they were ready to pay. Sometimes, the correct understanding of your product’s worth can make a huge impact on the initial succes of the product. Had Logitech priced the Revue at $99 during its initial launch, not only it would have sold well, it would have also given the much needed initial push for the Google TV. Eventhough it may sell well now, the market will still see the Revue as a failed product which could be sold only after a massive price cut. It is also a big negative press for Google TV. Many publications have already written an obituary for GTV after this price drop.
When I tried my hands on the first batches of Sony’s Google TVs, I had a mild shock. The software wasn’t intuitive, the remote was a mess and many things simply didn’t work. This is the classic mistake Google keeps making with other products – like Chrome OS. Rushing an alpha product into the market can have the adverse impact of killing the product early. Consumers are OK with seeing a beta tag on a website or software, but they will never accept a beta tag on a hardware (cars being a classic example). Sure you can have plenty of firmware updates to follow – but the initial impression is what matters for most hardware products.
