Michael Reichmann explains the SD1 price...

Started Jul 23, 2011 | Discussions
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DMillier Forum Pro • Posts: 19,182
Michael Reichmann explains the SD1 price...

From post on the Lula forum:

"It was not chip yield, manufacturing or supply issues, the earthquake, or any other seemingly plausible reason. It was just a misguided decision by one executive that flabbergasted the rest of the company. It was a really bad decision and I predict will one day become something of a business school case study. Call in the King Lear syndrome."

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desinteresadamente Regular Member • Posts: 264
Re: Michael Reichmann explains the SD1 price...

Thank-you David, somebody said it some time ago, therefore this only confirms the blatant mistake by this executive....

tammons Veteran Member • Posts: 6,004
Re: Michael Reichmann explains the SD1 price...

Interesting.

So they built the camera for $1000 and are selling it for $7000.
Nice profit margin.

leonard callow Contributing Member • Posts: 839
and he would know this how?

oh yeah , he would not - to even post such dribble (drivel if you prefer) is juvenile on his part.

and that this was posted by some other fool and now again by this one proves it must be true - how, exactly?

hard to believe adults post/ behave in this fashion
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worldcup1982 Senior Member • Posts: 1,040
Re: Michael Reichmann explains the SD1 price...

I fail to understand how amateur a company can be...one guy? this shows how much Sigma is behind the competition...not just product wise, even executives are worse than others...the guy didn't know sigma doesnt even have lenses to support the new camera? is this guy still working for Sigma?....

DMillier wrote:

From post on the Lula forum:

"It was not chip yield, manufacturing or supply issues, the earthquake, or any other seemingly plausible reason. It was just a misguided decision by one executive that flabbergasted the rest of the company. It was a really bad decision and I predict will one day become something of a business school case study. Call in the King Lear syndrome."

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FritsThomsen Senior Member • Posts: 2,759
...is this guy still working for Sigma ?...

worldcup1982 wrote:

I fail to understand how amateur a company can be...one guy? this shows how much Sigma is behind the competition...not just product wise, even executives are worse than others...the guy didn't know sigma doesnt even have lenses to support the new camera? is this guy still working for Sigma?....

He he .. Yes !! He owns it

No doubt Mr.Reichmann is refering to none other than the owner and founder Mr.Yamaki Michihiro.....

DMillier wrote:

From post on the Lula forum:

"It was not chip yield, manufacturing or supply issues, the earthquake, or any other seemingly plausible reason. It was just a misguided decision by one executive that flabbergasted the rest of the company. It was a really bad decision and I predict will one day become something of a business school case study. Call in the King Lear syndrome."

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SandyF Forum Pro • Posts: 14,937
Re: Michael Reichmann explains the SD1 price...

DMillier wrote:

From post on the Lula forum:

"It was not chip yield, manufacturing or supply issues, the earthquake, or any other seemingly plausible reason. It was just a misguided decision by one executive that flabbergasted the rest of the company. It was a really bad decision and I predict will one day become something of a business school case study. Call in the King Lear syndrome."

IF true, and we really have no way of knowing whether or not this is true, I actually think it's GOOD news. Decisions can be changed (assuming, at some time in the future); chip yield or manufacturing or component costs cannot be modified as easily.

I always wondered how the chip yield theory could be correct. I assume the chips are fabricated long before the cameras are assembled. So that IF there were a significant yield problem, the statements would not have been made relatively recently about a (lower) anticipated price point, ie the 7D statements by several Sigma executives.
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mike earussi Veteran Member • Posts: 5,837
Re: Michael Reichmann explains the SD1 price...

I still like my theory that the SD1 is just meant as a prototype and Sigma was looking for beta testers willing to pay 7 thou for the privilege.

ToasterFlyer Veteran Member • Posts: 3,238
Re: Michael Reichmann explains the SD1 price...

DMillier wrote:

From post on the Lula forum:

"It was not chip yield, manufacturing or supply issues, the earthquake, or any other seemingly plausible reason. It was just a misguided decision by one executive that flabbergasted the rest of the company. It was a really bad decision and I predict will one day become something of a business school case study. Call in the King Lear syndrome."

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My exact thoughts from the very get go ..when Sigma announced the price!! Has absolutely NOTHING to do with sensor production!!

Rich
ny

Paul Petersen
Paul Petersen Senior Member • Posts: 1,253
Re: Michael Reichmann explains the SD1 price...

At this point the question is more how will Sigma recover from this fiasco?

Repricing the SD1 ASAP would be easy except for the fact that a few people have put their own money down. From a CS standpoint the only answer would be to issue refunds for the difference.

Introducing a new model with the same sensor at the expected price would be an option but would shatter their desire to place the SD1 as their flagship product.

The biggest roadblock is the companies Japaneese culture. Death is often preferred to admiting you screwed up. Many lies can be told to "save face" which is permissible under their sense of allowing others to keep their honor. That concept is DOA in western culture so I guess we get to watch and wait to see what happens. This fiasco will not kill the company since this is not their prime business, however it is a major setback for their aspirations to be a player in the DSLR business.
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jrdigitalart
jrdigitalart Veteran Member • Posts: 3,428
Ha, ha, ha...

DMillier wrote:

From post on the Lula forum:

"It was not chip yield, manufacturing or supply issues, the earthquake, or any other seemingly plausible reason. It was just a misguided decision by one executive that flabbergasted the rest of the company. It was a really bad decision and I predict will one day become something of a business school case study. Call in the King Lear syndrome."

Talk about falling for a sucker punch.

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RWilliam Junior Member • Posts: 31
Re: Ha, ha, ha...

The current price point for the Sigma SD1 is based upon its footprint cost. It has everything to do with the Sigma purchase of Foveon. The corporate capitalization and cost cut in the ownership groups profits. Capital outlays while financed with stock options none-the-less still have an initial rate of investment born by the owner of Sigma. He simply needed to capture his investment, so why not at the pricing of the newest camera. While the additional sales of lenses will provide more income it will take more time and another investment/R&D and fabrication costs so it will take several years to recapture. Due to the Foveon investment, earthquake and increased production expenses/costs in Japan the new pro-lens line is still a distant future plan. The $6899 price of the SD1 lets him take more profit to the bank much sooner. After the Sigma ownership group reaches their capital out-lay the price will drop on the SD1, however, not significantly as it will be needed to off set the new pro-lense process investment. New products and product lines are initially cost prohibitive at first. So new purchases of the SD1 are paying for the acquisition of Foveon. It will pay-off in time with reduced price points on future cameras.

Paul Petersen
Paul Petersen Senior Member • Posts: 1,253
Re: Ha, ha, ha...

Yeah but at the price of limited sales. I am sorry but the 7k price bends the volume/revenue curve too far in wrong direction for recovering whatever the investment amount was.
Pete
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mike earussi Veteran Member • Posts: 5,837
Re: Ha, ha, ha...

RWilliam wrote:

The current price point for the Sigma SD1 is based upon its footprint cost. It has everything to do with the Sigma purchase of Foveon. The corporate capitalization and cost cut in the ownership groups profits. Capital outlays while financed with stock options none-the-less still have an initial rate of investment born by the owner of Sigma. He simply needed to capture his investment, so why not at the pricing of the newest camera. While the additional sales of lenses will provide more income it will take more time and another investment/R&D and fabrication costs so it will take several years to recapture. Due to the Foveon investment, earthquake and increased production expenses/costs in Japan the new pro-lens line is still a distant future plan. The $6899 price of the SD1 lets him take more profit to the bank much sooner. After the Sigma ownership group reaches their capital out-lay the price will drop on the SD1, however, not significantly as it will be needed to off set the new pro-lense process investment. New products and product lines are initially cost prohibitive at first. So new purchases of the SD1 are paying for the acquisition of Foveon. It will pay-off in time with reduced price points on future cameras.

By your logic then Sigma should price them at $1,000,000 each. That way they would get a very fast return on investment--provided thay sold any at all.

exdeejjjaaaa
exdeejjjaaaa Veteran Member • Posts: 7,744
Re: Michael Reichmann explains the SD1 price...

Paul Petersen wrote:

The biggest roadblock is the companies Japaneese culture. Death is often preferred to admiting you screwed up.

thing of the past... nobody dies nowadays...

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Couscousdelight Regular Member • Posts: 428
Re: Michael Reichmann explains the SD1 price...

Paul Petersen wrote:

Introducing a new model with the same sensor at the expected price would be an option but would shatter their desire to place the SD1 as their flagship product.

that's a very good idea indeed. The 15MPX foveon sensor, in a body without video & liveview, and a 98% viewfinder ; a budget body.
Oh, wait...
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Phil Loughran Veteran Member • Posts: 3,407
Re: Michael Reichmann explains the SD1 price...

exdeejjjaaaa wrote:

Paul Petersen wrote:

The biggest roadblock is the companies Japaneese culture. Death is often preferred to admiting you screwed up.

thing of the past... nobody dies nowadays...

If you've been watching Torchwood..true....except for Jack....but then this is fiction!

Gary Dean Mercer Clark
Gary Dean Mercer Clark Veteran Member • Posts: 5,318
Re: The price was already set at below $2000.00 prior to the release.

The price was already decided during the development phase of the SD1 project. That is why there are so many documented interviews where high ranking Sigma officials tease us with hints that the price would be competitive with the Canon 7D etc. Contracts for chips and production were fixed costs at that point. Companies know to the penny exactly how much each product will cost and how much they will charge when it comes to market a year before it is even built.

It is simple. The SD1 was designed to compete with the Pentax K5, Canon 7D in that price range and if you look at the build--it is comparable to those models and very nicely built from my experience shooting with it. It was never intended to be sold above $2000.00 in price. EVER. Now why would a company price a product at 500 percent higher than planned? Because the owner said so. End of controversy.
Its his company. He can do whatever he wants.

mike earussi wrote:

RWilliam wrote:

The current price point for the Sigma SD1 is based upon its footprint cost. It has everything to do with the Sigma purchase of Foveon. The corporate capitalization and cost cut in the ownership groups profits. Capital outlays while financed with stock options none-the-less still have an initial rate of investment born by the owner of Sigma. He simply needed to capture his investment, so why not at the pricing of the newest camera. While the additional sales of lenses will provide more income it will take more time and another investment/R&D and fabrication costs so it will take several years to recapture. Due to the Foveon investment, earthquake and increased production expenses/costs in Japan the new pro-lens line is still a distant future plan. The $6899 price of the SD1 lets him take more profit to the bank much sooner. After the Sigma ownership group reaches their capital out-lay the price will drop on the SD1, however, not significantly as it will be needed to off set the new pro-lense process investment. New products and product lines are initially cost prohibitive at first. So new purchases of the SD1 are paying for the acquisition of Foveon. It will pay-off in time with reduced price points on future cameras.

By your logic then Sigma should price them at $1,000,000 each. That way they would get a very fast return on investment--provided thay sold any at all.

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Roland Karlsson Forum Pro • Posts: 24,876
Re: Do MR know this?

DMillier wrote:

"It was not chip yield, manufacturing or supply issues, the earthquake, or any other seemingly plausible reason. It was just a misguided decision by one executive that flabbergasted the rest of the company. It was a really bad decision and I predict will one day become something of a business school case study. Call in the King Lear syndrome."

Yeah ... this seems to be the correct explanation, even though it seems odd. I wonder though if MR really knows this --- or if it is an educated guess. And if he knows it - how reliable is his source.

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TomFla Regular Member • Posts: 489
Re: The price was already set at below $2000.00 prior to the release.

I tend to agree with Gary that a company that has reached the level Sigma has would have had to have had a real handle on costs well before releasing a product. Not to mention the PR failure of bait and switch with blurbs about a price point in the 7d range and then releasing it with a silly MSRP.

Sure Sigma has the option to do this; but they also have the responsibility to take the heat.
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