We believe Barco should proceed with the planned introduction and launch of the BD700 in October 1989 at a reduced price of $12,000 to shield it from the impact of Sony’s 1270 in case the same is launched at $15,000. This price reduction is feasible because the data segment earns a high margin of 51% which can be used to reduce the price. The BD700 would have a scan frequency of 64 kHz which while short of the 1270’s 75 kHz would be sufficient for a data projector. Moreover the $3,000 price difference between the 1270 and the BD700 and the fact that the BD700 is digital would shield it from competition by the 1270.
Doing so would allow Barco to retain the trust and reliability in the eyes of its existing customer and dealer base that already had committed orders for the BD700. It would also maintain employee morale since a lot of work had already gone into the BD700. After introduction of the BD700 Barco would be free to focus its efforts on the BG800 using the 8” tube from Sony Components and new lenses from Fujinon. Since Fujinon is an independent supplier it can be reasonably assumed it would supply Barco as well. The BG800 can be launched by the middle of 1990 using an accelerated work schedule and its price can be lowered to $20,000 to position it effectively against the 1270. Even if the price of the 1270 is at the lower range of $15,000 the incremental performance of the BG800 (greater scan frequency of 90 kHz vs 75 kHz) would be sufficient to justify the higher price.
Barco and Sony’s Strengths
Barco’s strengths lie in strong R&D that gives it a technological edge over its competition and gives it a positive reputation in the eyes of its customers. This strength is also matched by Sony although its projectors are currently believed to be lower in cost and performance. Barco is also known to have a solid international presence with established dealer networks in Europe, Asia and North America. This gives it... [continues]
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