Extraordinary Genius - Chapter 642
Chapter 642 – One thing leads to another
Philips did not hire any celebrities to endorse. They hadwanted to hire an A-list singer, but negotiations fell through. It was becausePhilips wanted to hire Michael Jackson and Michael Jackson was under Sonylabels. There was no way Sony will allow him to endorse Philips products.
In the end, Philips chose to use its traditional style. Theywill use the technology approach like Wind and Rain. They will only showcasethe technological features of the product and its brand.
The amount Philips allocated for their advertising campaignwas also a lot. Their advertisement could be seen almost everywhere, especiallyin Europe.
The Super VCD player was market aggressively, and theirsales increased steadily. The regular VCD player selling price was reducedfurther, and the other VCD player brands sales declined.
Even those big electronics companies could not take it. Otherthan Sony, Toshiba, Hewlett-Packard, and Pioneer, the different brands decidedto look for Wind and Rain Electronics for a talk.
“Manager Feng, NEC’s China’s representative, had called. Hewishes to speak to you about the DVD industry standards.” Jiang Wanmengreported.
Feng Yu raised his brows. The time had come?
Everything Feng Yu did was for those consumer electronics tobow down to him.
At the start, Feng Yu gave those companies the authorizationto the VCD patents and allow them to produce VCD players. After that, hemaintained the prices of his VCD players when those companies lowered theirselling prices. He purposely gave some market share to those companies.
When those companies saw the market was doing better, theyincreased their productions and promotional efforts. All of them wanted a moresignificant market share and more profits.
But at this moment, Feng Yu lowered the retail prices of hisregular VCD players. This was not considered a heavy blow to those companies asthey still have some profits.
Since there was still profits and the production wasincreased, the companies will not admit defeat. To those big companies, if anew product were launched and taken off the shelves after a few months, theirbrand image would be affected.
Some smaller companies were forced to sell off theirexisting stocks and stop production. These smaller companies only fulfill theminimum production figure of 10,000 units stated in their contract with Windand Rain electronics. These companies were able to make some money at the startbut suffered losses later on. Overall, they managed to break even or made atiny margin. But if they continue to produce VCD players, they will inevitablysuffer heavy losses.
Soon after, the Super VCD player was launched. The regularVCD players selling prices dropped again. This was the time when Wind and Rain,AIWA and Philips started sharing their distribution channels. Their retailstores begin to sell a variety of products, and this hit the other companiesbadly.
Those big companies still insist on producing VCD players,and they also formed an alliance to share their distribution channels toincrease their sales.
At the start, these companies’ sales did improve, and theythought the crisis was over. But out oftheir expectations, Wind, and Rain, AIWA and Philips started to market theirSuper VCD players aggressively. They poured large amounts into theiradvertising campaigns.
You all spent so much on advertising, can you still makeprofits? The profits for one regular VCD player was only so much. Even if the earningsfor Super VCD players were high, it should also be around 200 USD at most. The profitsfor 10,000 units was only approximately 2 million USD.
This large-scale advertising campaign cost more than 10million USD a year. How many VCD players can you sell in a year? The bosses ofthese few companies are all nuts! Do they even know how to count?!
But those companies soon realized that it was not the bossesof those companies had gone crazy. It was because their products could reallymake money.
Just the Super VCD players alone sold over 500,000 unitsafter 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 morethan 20 million USD. It was more than sufficient to recoup the money spent onadvertising.
Most importantly, the sales for the regular VCD players,including Wind and Rain and AIWA, started to drop drastically. The regular VCDplayer market was on the verge of collapsing.
Based on those big companies’ calculations, the total salesfor regular VCD players should exceed 1,000,000 units this year. They should beable to get at least half of this figure and the rest by Wind and Rain andAIWA. The profits from the regular VCD players was not a small amount.
The most frustrating part for those companies was that theyhad open up the market, and the fruits of their labor were taken away fromthem!
Of course, those companies did not know that the future VCDplayer sales will be an astronomical amount, and the profits could even supporta country. On average, every two households will own one VCD player. Theoverall amount of VCD players in the market was more than 100 million units.
When the DVD players entered the market, the total sales forboth players was more than 1 billion!
This will happen to start in 1997 in Feng Yu’s previous lifeand reaches its peak in 1999. But now, everything was brought forward. Feng Yuestimate that next year will be the start of the boom and the peak will happenmuch earlier.
Wind and Rain Electronics will have lots of reserves andinvest in developing the laser optic drive faster.
Feng Yu had led all these companies by the nose. They hadhelp Feng Yu open up the market, and most of the money earned went into hispocket. Now, these companies were forced into a dead end. If this still carrieson, 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 RainElectronics. If two big companies wanted the own the more significant marketshare, they should not compete. They should collaborate to monopolize themarket, like Wind and Rain Electronics and Philips.
These companies had chosen to support the other party forthe DVD industry standards, and therefore, there was no way for them to workwith Wind and Rain Electronics. But now, some of these companies changed theirminds and want to support Wind and Rain Electronics’ DVD industry standards –Wind and Rain Philips industry standards. These companies were willing to do soto get a slice of the future DVD industry pie.
NEC was the first company to approach Wind and RainElectronics. This was also due to the bad relationship between them and Sonyand Toshiba.
But Feng Yu did not meet China’s representative of NEC. Howcould a small representative meet him? It should be at least the company’spresident or the vice president.
Feng Yu had just rejected the NEC representative, and arepresentative from another company contacted Jiang Wanmeng. He wanted to meetthe real boss of Wind and Rain Electronics to discuss some matters.
These people had contacted Jiang Wanmeng because theythought Jiang Wanmeng could make the decision. But Jiang Wanmeng told them thatalthough he was the General Manager and one of the shareholders, there wasstill a controlling shareholder in the company. This shareholder was the finaldecision maker in Wind and Rain Electronics.
So, there was a constant stream of people wanting to meetFeng Yu. The ranks of the people sent to Wind and Rain Electronics also becamehigher.
All of these people wanted the same thing. All of themwanted to support Wind and Rain Philips DVD standards first, in return forlower authorization fees. They wanted to make some profits.
These companies were free to support the industry standardsfrom any company. They were also not the ones who started the industry standardin 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 Yufinally made his appearance. He was about to deal a heavy blow to Sony and therest!
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