There is something very shady about the whole thing. I have worked in video (production) for most of the last decade and the flip was the hottest thing to hit camcorders since the invention of mini-DV. Phones and digicams also do video, but do not compare well for a variety of reasons. Flip hit a certain sweet spot that other products do not, and was poised to continue capitalizing on it.
You pull the plug on a product when you start losing money on it, not because you can see marginal net going to zero several years in the future. I would very much like to know the inside scoop on this one.
You pull the plug on a product when you start losing
money on it, not because you can see marginal net going
to zero several years in the future. I would very much
like to know the inside scoop on this one.
While this seems logical, it's not true. Many companies have margin targets that their executives are heavily incentivized to meet.
I've personally seen situations where lucrative (50+% margin) sales opportunities were given a no-bid because despite being extremely profitable, it would hurt the executives' bonuses. I've also seen entire product lines dismantled despite substantial revenue (and profit) contributions because they were "hurting the company's operating margin."
Executive compensation is a strange and often stupid beast. It's not at all surprising to me that something like this could happen.
You pull the plug on a product when you start losing money on it, not because you can see marginal net going to zero several years in the future. I would very much like to know the inside scoop on this one.