Hear 2.0

Are you waiting in line for your HD radio?

"If you lower the price enough, folks will buy the radio."

That's the belief about HD radio that is being stoked in our industry.

And, of course, it's wrong.

At any given price consumers will purchase an item if the desire is there and if the value of that item equals or exceeds the price being charged for it. This is basic economics.

For example, if you wanted to be first to own a Sony PlayStation 3 game system, you waited on line for three days for the chance to spend $600 on one of these babies when the doors opened at Best Buy last Friday.

And you did it gladly. No discounts required.

Compare that with the industry's attitude about selling new radio hardware: "Once the price drops below $100, they'll fly off the shelves."

The more you have to drop your price, the lower the chance people value what you're selling. And the less likely you are to sell your wares at any price the maker of those wares finds appealing.

No matter if you're selling HD radios or satellite radios or whatever.

You could, of course, give the radios away (as we have argued), but then don't pretend that your business plan requires people to buy them.

Otherwise you will be judged a failure if they don't.

Check out this notice from Sirius about their hot new portable Stiletto 100:

Due to high demand, we're now taking pre-orders on Stiletto 100. Place your order today as new shipments are arriving weekly. Orders placed today are now expected to ship the week of November 27, 2006.

And the price?

$349.99.

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