If this is the case, then perhaps somebody else could come along, get 950 innards from Eastech, and sell them quite cheaply indeed, as they did not have to spend the R&D money to come up with the designs. Sounds like a pretty raw deal for Outlaw to me... Unless there's more to it that I don't understand.

Unless Outlaw is getting the cheapest price from Eastech for the 950 innards; after all, they were the primary designers of the 950. The non-exclucivity deal with Eastech was probably done to bring the wholesale cost down for Outlaw; a savings they're passing on to their customers.

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Sanjay

Sanjay (small world!) - that's really the only way that a deal like this works -- Outlaw gets preferential pricing, so that it can undercut those also selling the same design.

Yeah, but isn't there still the initial capital outlay to design the thing? Are they basically giving away their R&D work to Eastech in return for lower per-unit manufacturing costs?

Hi Nigel,

After watching you and Stuart become 'Gunslingers', I couldn't resist. The Saloon is one of the most civilized forums I've been to; very nice people.

According to what Outlaw has said, aside from being able to undercut the competition's price, they're also getting a period of exclucivity. From their last newsletter: "No other brand using anything derivative of the Model 950 will ship until ALL current reservations for the 950 have been filled, and perhaps for some time after that."(caps theirs)

All of which will come in handy for the Outlaws in this very competitive home theatre market.

Sanj


[This message has been edited by sdurani (edited February 04, 2002).]

[This message has been edited by sdurani (edited February 04, 2002).]

Matthew,

I don't think Outlaw is "giving away" anything. They're simply striking a deal with Eastech that is mutually beneficial to both companies. Since we don't know the details, I'm guessing that Outlaw is letting Eastech OEM their (Outlaw's) design in exchange for a better price and a period of exclucivity. Eastech gets a new product to sell; one that is already creating significant buzz. Outlaw gets to grab the lion's share of their market before the competition shows up; and even after competition comes along, Outlaw will still be able to keep the price of their competitive.

If Outlaw sells lots of their 950 processors, it still won't be a bad thing for Eastech. In fact they'll be able to use the 950's popularity when shopping their OEM unit to companies, like Atlantic Technologies, that want to sell a processor but aren't in the processor business.

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Sanjay

I guess that sort of makes sense. I still don't completely understand, but I never had much of a head for business. I'll take y'all's word for it.