Chapter 642 – One thing leads to another
Philips did not hire any celebrities to endorse. They had wanted to hire an A-list singer, but negotiations fell through. It was because Philips wanted to hire Michael Jackson and Michael Jackson was under Sony labels. There was no way Sony will allow him to endorse Philips products.
In the end, Philips chose to use its traditional style. They will use the technology approach like Wind and Rain. They will only showcase the technological features of the product and its brand.
The amount Philips allocated for their advertising campaign was also a lot. Their advertisement could be seen almost everywhere, especially in Europe.
The Super VCD player was market aggressively, and their sales increased steadily. The regular VCD player selling price was reduced further, and the other VCD player brands sales declined.
Even those big electronics companies could not take it. Other than Sony, Toshiba, Hewlett-Packard, and Pioneer, the different brands decided to look for Wind and Rain Electronics for a talk.
……
“Manager Feng, NEC’s China’s representative, had called. He wishes to speak to you about the DVD industry standards.” Jiang Wanmeng reported.
Feng Yu raised his brows. The time had come?
Everything Feng Yu did was for those consumer electronics to bow down to him.
At the start, Feng Yu gave those companies the authorization to the VCD patents and allow them to produce VCD players. After that, he maintained the prices of his VCD players when those companies lowered their selling prices. He purposely gave some market share to those companies.
When those companies saw the market was doing better, they increased their productions and promotional efforts. All of them wanted a more significant market share and more profits.
But at this moment, Feng Yu lowered the retail prices of his regular VCD players. This was not considered a heavy blow to those companies as they still have some profits.
Since there was still profits and the production was increased, the companies will not admit defeat. To those big companies, if a new product were launched and taken off the shelves after a few months, their brand image would be affected.
Some smaller companies were forced to sell off their existing stocks and stop production. These smaller companies only fulfill the minimum production figure of 10,000 units stated in their contract with Wind and Rain electronics. These companies were able to make some money at the start but suffered losses later on. Overall, they managed to break even or made a tiny margin. But if they continue to produce VCD players, they will inevitably suffer heavy losses.
Soon after, the Super VCD player was launched. The regular VCD players selling prices dropped again. This was the time when Wind and Rain, AIWA and Philips started sharing their distribution channels. Their retail stores begin to sell a variety of products, and this hit the other companies badly.
Those big companies still insist on producing VCD players, and they also formed an alliance to share their distribution channels to increase their sales.
At the start, these companies’ sales did improve, and they thought the crisis was over. But out of their expectations, Wind, and Rain, AIWA and Philips started to market their Super VCD players aggressively. They poured large amounts into their advertising campaigns.
You all spent so much on advertising, can you still make profits? The profits for one regular VCD player was only so much. Even if the earnings for Super VCD players were high, it should also be around 200 USD at most. The profits for 10,000 units was only approximately 2 million USD.
This large-scale advertising campaign cost more than 10 million USD a year. How many VCD players can you sell in a year? The bosses of these few companies are all nuts! Do they even know how to count?!
But those companies soon realized that it was not the bosses of those companies had gone crazy. It was because their products could really make money.
Just the Super VCD players alone sold over 500,000 units after the advertising campaign. Only 4 brands were competing in this market, and on average, each brand sold at least 100,000 units. The profits were more than 20 million USD. It was more than sufficient to recoup the money spent on advertising.
Most importantly, the sales for the regular VCD players, including Wind and Rain and AIWA, started to drop drastically. The regular VCD player market was on the verge of collapsing.
Based on those big companies’ calculations, the total sales for regular VCD players should exceed 1,000,000 units this year. They should be able to get at least half of this figure and the rest by Wind and Rain and AIWA. The profits from the regular VCD players was not a small amount.
The most frustrating part for those companies was that they had open up the market, and the fruits of their labor were taken away from them!
Of course, those companies did not know that the future VCD player sales will be an astronomical amount, and the profits could even support a country. On average, every two households will own one VCD player. The overall amount of VCD players in the market was more than 100 million units.
When the DVD players entered the market, the total sales for both players was more than 1 billion!
This will happen to start in 1997 in Feng Yu’s previous life and reaches its peak in 1999. But now, everything was brought forward. Feng Yu estimate that next year will be the start of the boom and the peak will happen much earlier.
Wind and Rain Electronics will have lots of reserves and invest in developing the laser optic drive faster.
Feng Yu had led all these companies by the nose. They had help Feng Yu open up the market, and most of the money earned went into his pocket. Now, these companies were forced into a dead end. If this still carries on, these companies will suffer heavy losses.
Now, some of these companies could not hold up any longer. After all, these companies did not have any grudges against Wind and Rain Electronics. If two big companies wanted the own the more significant market share, they should not compete. They should collaborate to monopolize the market, like Wind and Rain Electronics and Philips.
These companies had chosen to support the other party for the DVD industry standards, and therefore, there was no way for them to work with Wind and Rain Electronics. But now, some of these companies changed their minds and want to support Wind and Rain Electronics’ DVD industry standards – Wind and Rain Philips industry standards. These companies were willing to do so to get a slice of the future DVD industry pie.
NEC was the first company to approach Wind and Rain Electronics. This was also due to the bad relationship between them and Sony and Toshiba.
But Feng Yu did not meet China’s representative of NEC. How could a small representative meet him? It should be at least the company’s president or the vice president.
Feng Yu had just rejected the NEC representative, and a representative from another company contacted Jiang Wanmeng. He wanted to meet the real boss of Wind and Rain Electronics to discuss some matters.
These people had contacted Jiang Wanmeng because they thought Jiang Wanmeng could make the decision. But Jiang Wanmeng told them that although he was the General Manager and one of the shareholders, there was still a controlling shareholder in the company. This shareholder was the final decision maker in Wind and Rain Electronics.
So, there was a constant stream of people wanting to meet Feng Yu. The ranks of the people sent to Wind and Rain Electronics also became higher.
All of these people wanted the same thing. All of them wanted to support Wind and Rain Philips DVD standards first, in return for lower authorization fees. They wanted to make some profits.
These companies were free to support the industry standards from any company. They were also not the ones who started the industry standard in the first place. There were no friends or enemies in the business world. There are only benefits!
When Panasonic Vice President came over personally, Feng Yu finally made his appearance. He was about to deal a heavy blow to Sony and the rest!