Business & Technology Nexus

Dave Stephens on technology and business trends

What’s A Buyer To Learn From Streetprices.com?

with 3 comments

Many of my friends and colleagues are regulars at PriceWatch.com and Streetprices.com. I’ve always like Streetprices, but it may just be because I found it and used it first, who knows.

Websites like these are sometimes even more telling than electronic component commodity indexes. Because in this fast moving Procurement category, being ill-informed about pricing trends can spell disaster. And although consumer prices tend to lag producer price changes, even a small drop in demand can trigger discounting in the retail and wholesale channel and indicate a future downward pressure on component prices.

I have a lot of fun tracking pricing in particular subsegments of consumer electronics such as digital cameras and digital video recorders. It all started when my wife and I had our first child. Like the rest of you with kids, that trigger got us into the market & buying stuff – it didn’t matter that devices would be tons cheaper – we needed the equipment asap. Then, like everyone else, we watched as our new gear was mercilessly devalued by the market as the pace of technology marched on.

Computers were one of the first super-rapid continuously commoditizing markets. But now the entire array of consumer electronics seems to succumb to a continual surge in downward pricing pressure. It’s a sympton of a hyper-efficient market – efficient because its product segments offer insatiable appeal to customers. It’s a nearly irresitible market to pursue – because suppliers and startups know a better, faster, and cheaper play will allow them to mint money.. but only for a short time.

For us consumers, and for that matter us professional buyers, this begs an important question: how do you decide when the right time to buy or to refresh is? When is the time to lock in a corporate contract & what is the right pricing and volume guarantees? It’s a difficult, complex question with so many variables most people just give up and go with their gut.

I just bought a MacBook for $999. ($100 amazon rebate on $1099 apple store price). I know Apple is on the verge of refreshing the CPU’s, among other things. I postponed the purchase for months, but finally broke down. And a new OS is on the way so I’ll need to pay for that upgrade by next March. (because I do want that new Time Machine feature)

If someone can figure out an algorithm to help companies determine the sweet spot for buying in the electronic component and consumer electronic marketplace, and patent it, that would sure be a nice business. To me, this sounds like Doug Hudgeon’s sweet spot – he’s the equation guy – so I’ll issue a challenge to him to outline the factors that one should evaluate to try and make the decision on whether to “buy now” or “hold out” quantitative. Michael Lamoreaux might have some innovative ideas too – after all, if memory serves he’s the phD guy.

In addition, it seems to me a closed service like PurchasingData.com should consider opening up & collaborating with a multitude of sources (preferably viral) for pricing – with an aim to build a transparent open B2B version of streetprices.com. If any of you are interested in exploring this idea further, email me.

In the meantime, I’m still on the sidelines for a LCD or gas plasma refresh for my Rear Projection widescreen. Prices are just dropping too fast to jump into the market. Does anyone have any advice on when to replace my 65″ Mitsubishi widescreen? I’m guessing if you knew when the last big additional factory was coming online that could precede a temporary plateau in the downward movement of prices.

-Dave

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Written by Dave Stephens

08/31/06 7:43 PM at 7:43 pm

Posted in Opinion

3 Responses

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  1. I’d recommend introspection as the best method of timing the tech-purchase sweet spot: Imagine yourself buying the tech component, insuring it and then having it stolen from you. If, when making your claim, you secretly hope that the insurer will pay you cash rather than replace it with the same, now outdated, model; then it’s the correct time to buy that model as the price will be right ;)

    hudgeon

    08/31/06 11:32 PM at 11:32 pm

  2. Talk about deja vu, Dave. I had a conversation with a customer two days ago, in which he told me about an attempt to write a contract with a supplier based on a pre-negotiated delta from the monthly low-price average from StreetPrices.com.

    He didn’t get the supplier to bite, but he hasn’t abandoned the idea.

    Eric Strovink

    09/1/06 4:00 AM at 4:00 am

  3. Dave:

    If I could come up with a formula to determine the right time to buy, I’d be making a lucrative living as a stock trader.

    As for when to buy, I’ve noticed historically that price / performance tradeoffs are generally best on model A after model B has been introduced but just before model C is about to be released.

    Michael Lamoureux

    09/1/06 7:52 AM at 7:52 am


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