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Pioneer's DJ & AV Department Unprofitable... 900 To Be Laid Off
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| Dykes_on_Jay |
| Don't price gouge in an evolving market. Too bad, so sad. Own nothing Pioneer anymore. |
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| rubez |
just sent back a DJM 700. didn't like it. also their customer service has got to be the actual worst ever.
gonna do up my xone 92. new lines faders, new faceplate and an innofader.
wont be buying anything pioneer again. |
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| Ryan0751 |
That's not exactly what the article said...
It said the Pioneer Home A/V market, which currently also includes the DJ business and optical drives, would potentially be spun off.
It's all one business unit. I doubt the DJ portion is "unprofitable", they are the market leader!
I can certainly see their home A/V division being difficult to run these days... Lets face it, most people aren't buying nice A/V systems like that used to. They want an $80 sound bar to go with their cheap OEM LCD TV. |
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| DJ RANN |
Well it does speak to the state of the AV market as a whole.
I know a lot of pro/home AV installers and now they now only make money off labour, not a dime off equipment.
They used to buy flatscreen TV's off the manufacturers direct, or 3rd part distributors, and now it's cheaper for the end user to buy them online or the installer to go to best buy.
People aren't buying expensive name brand hifis etc - it's either cheap (but decent) major brand offerings or super expensive small boutique brands.
It really doesn't make sense though my they wouldn't split the DJ division away from AV as a whole. Sure they have sold a ton of equipment for DJ's but they may be the victim of their own poison. They tried to price everyone out of the market, while endlessly pushing "new" products that were minor variations of existing models, just to try to drown out the competition who were making better made equipment but bringing less new models or changes tot he market (vestax, A&H, Rane etc).
It may simply be a case of market saturation - they realize the DJ market is as big as it's going to get and they have burned their bridges in respects. I certainly decided never buy a pioneer mixer ever since I realized how damn the DJM500 was - the emphasis was on new gimmicky toys, not quality, and that was the tacky shape of things to come from them. CDJ's great, they kill it, but never a mixer.
And even though they probably sell tons of DJ equipment, the amount of money they spend on marketing is obscene. Expensive dedicated microsites, events, DJ sponsorship (Well over 100 dj's gloablly) etc. Must cost a fortune. |
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| Ryan0751 |
I agree with all of the.
I actually bought a DJM-900 because I needed a mixer other than my Rane. I have to say, it's actually pretty nice. And clearly WAY better than the 500/600.
Still, for the $1800 I spent on it I could have gotten an A&H. But really half the reason I got the DJM was that it's ALWAYS easy to resell for a high price.
I wonder what the margins are on the gear. Clearly they don't move THAT many units compared to other consumer products, but they must make quite a bit on each. |
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| DJ RANN |
Nope. Margins at best are around 25%. I used to manage a huge pro audio retailer in London and the best margins were 45%. Some (apple products) were as low as 3-4%. Most were between 25% and 15%.
It's not great, but it's not terrible, but by the time you throw in returns, repairs, customer/technical support, shipping, distribution....it's not a massive profit.
That's why I think pioneer wanted to endlessly re-invent the wheel - they needed to keep people buying so keep their volumes high (insert joke here about pioneer redlining). I know several sheeple who would trade up every time they bought out a new mixer.
Vestax would make one mixer, and kept it on market for a 5-10 year product cycle. Pioneer would bring out a new model or "mk2" with as little as 2 years of initial launch.
I think that's whats really behind the sale - it's too much R&D, Marketing and production costs to stay on their business model of low margin, high volume. |
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| Ryan0751 |
But those are the sales margins for re-sellers...
I'm talking about their margins, as manufacturers. Like you said the volume is lot, and that's probably why the prices are so high.
I remember when I bought my 1200's and I thought $500 a deck was ridiculously expensive, now I bought CDJ-2000s for $1800 each less than 10 years later.
| quote: | Originally posted by DJ RANN
Nope. Margins at best are around 25%. I used to manage a huge pro audio retailer in London and the best margins were 45%. Some (apple products) were as low as 3-4%. Most were between 25% and 15%.
It's not great, but it's not terrible, but by the time you throw in returns, repairs, customer/technical support, shipping, distribution....it's not a massive profit.
That's why I think pioneer wanted to endlessly re-invent the wheel - they needed to keep people buying so keep their volumes high (insert joke here about pioneer redlining). I know several sheeple who would trade up every time they bought out a new mixer.
Vestax would make one mixer, and kept it on market for a 5-10 year product cycle. Pioneer would bring out a new model or "mk2" with as little as 2 years of initial launch.
I think that's whats really behind the sale - it's too much R&D, Marketing and production costs to stay on their business model of low margin, high volume. |
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| DJ RANN |
| quote: | Originally posted by Ryan0751
But those are the sales margins for re-sellers...
I'm talking about their margins, as manufacturers. Like you said the volume is lot, and that's probably why the prices are so high.
I remember when I bought my 1200's and I thought $500 a deck was ridiculously expensive, now I bought CDJ-2000s for $1800 each less than 10 years later. |
In nearly every industry, the sales margins are relative to manufacturer margins unless the manufacturer is either a genius and one of the few making decently high %'s (incredibly rare) or an idiot and hardly making any good money (more common than you think).
Their volume is high but not that high compared to other consumer electronics. They probably sell 100 times the number of $500 car stereos compared to $2000 CDJ units, and those car stereos have much better margins. DJ equipment, both for retailers and manufacturers have never been great, and that's why so many big brands struggle and even disappear.
$500 a deck was a lot in the grand scheme of things then; you could buy a decent quality hifi deck for half that money and one of the reasons they stopped producing the 1200 range was that they were expensive to produce and ship (heavy).
If you ever open up your CDJ2000 you'll see why it costs so much. It's basically a fully fledged computer built for playing music in rough environments. I still think $1800 is a joke for a single CDJ but by the time you take out all the associated costs (and I'm not even talking about marketing) they are probably only making a couple of hundred per unit. |
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| KiNeTiC ENeRgY |
| Too bad they're not priced high enough to keep the nub "I want to be a DJ to get laid" kids out of the scene. |
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