Why I'm not going to buy eDGe... at least in Europe... (a few words about pricing)

Hi, I'm starting this thread because I haven't noticed any decent discussion about the pricing policy by entourage. At least not towards Europe.

Some heartbreaking facts for us here, on the other side of the pond.

US & Canada vs Europe
$539 vs $750 !!! (July 2010 rates)

For the option of different colours it's actually more than $800!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

And it will get even worse as € tends to gain momentum against $.

(And please don't tell me that I can buy it in the USA or that someone can send it to me. My home is my castle, right? If Europe is supposed to be a market than treat it like one.)

I know that electronics are ridiculously expensive in Europe. But they are even more expensive in central Europe. On top of that we need to face huge problems with most online application/electronics stores. If you want an example, AppleStore doesn't work from Poland although iPhone sales here are ridiculously high. So far I haven't been assured by entourage that while Europe is supported by their shop, central Europe won't be excluded from the privilaged league...

I come from Poland, one of the strongest economies in the region, and actually one of only a few countries in the world which survived the last economic crisis. We will probably be the best European economy for the second time this year! And 1) electronics are more expensive here than in western Europe, which are more expensive than in USA, which are more expensive than in Asia... 2) we still earn a fraction of what is understood as a decent salary in Europe and USA, 3) there are around 38,000,000 of us in Poland! We are one of the biggest markets on the continent! And there are millions of other Europeans in the same situation.

OK, coming back to the topic.

eDGe seems to be a masterpiece and a breakthrough not only for students and academics. But it won't do so nicely in Europe, especially central Europe, for the price.

For $750 (or actually around $900 when everything is taken into account) I can have :
- two netbooks & two e-readers
- a good notebook & a good e-reader
- a fantastic laptop, maybe even a desktop replacement

On top of that, in order to turn eDGe into a netbook you need an additional keyboard. There is a nice thread about some great USB devices that work miracles and enhanve eDGe usability. But it's extra $30-60 on top of $750-800+ we already need to pay! Plus packing&posting... So, eDGe has already hit $900 before it is delivered to my doorstep...

So my advice to entourage is, lower the price and you'll make an unforseen profit. Keep the price and you'll remain another fancy gadget that people talk about on Facebook...

FYI, we had a recent thread about European availability and price of the eDGe:

http://www.entourageedge.com/forums/...ghlight=Europe


EDIT: There was also a thread rebuking CDW for their markup of the eDGe and eDGe accessories (both for Europe and US), but "CDW" is too short a keyword to search. But probably a search under something like "ridiculous" or "shameless" might pull it up.

I'm not going to argue that the eDGe is probably not a great value for European customers at this time and if I were in the EU, I probably wouldn't have purchased one.

But small clarification on the numbers aspect, as I'm not sure if you're making a fair apples-to-apples comparison.

First, there is a markup on eDGE's sold by CDW to US customers. They currently list the Midnight Blue for $549.99 ($499 direct from enTourage, but out-of-stock) and the other colors for $599.99 ($539 direct from enTourage). In other words, there's a ~10-11.5% markup that is being charged by CDW that US customers are currently paying that is outside of enTourage's direct control. Also, while enTourage's distribution partner for direct sales in the US (Foxconn, I believe) operates in Europe, my (brief) personal experience with European shipping is that it the industry over there has certain dynamics (greater unionization, tighter regulations, etc.) which results in much higher costs.

Second, the nature of taxes between the US and Europe is different. In the US, a price is advertised and then a local tax is charged on top of that. For example, I purchased my eDGe for $499 but then paid an additional $41.17 (8.25%). As you probably know, most of Europe uses a value added tax which is included in the cost of the good. In the other thread, it was noted that the price includes a 19% Dutch VAT.

Now, let's assume that I purchased a non-Midnight Blue eDGe from CDW in the US. That would cost me $599.99 plus $49.50 in tax. So the total cost would be $649.49, not $539. So if we're making an apples-to-apples comparison, the price difference is more around $100 than $211. And a good chunk of that difference is because European VAT tax rates are higher than US sales tax rates.

If anything, enTourage's margins on international sales are *smaller* than domestic (which I doubt are very large to begin with), particularly when expected costs for warranty work and such are considered.

It cost me $700 usd (include taxes and delivering to russia). So 750 is not so much if it include 100% free replacement\return warranty. Probably if they learn from big companies and send EE directly from manufactor (located in china) it will allow lower the price. As for resellers, it's not interesting for them to sell something if price were not raised to about 20%.

p.s. the real reason for you my be that it's not support all european language (especially on e-ink side). I mean the keyboard layout is in english, and it's not easy to find an keyboard with alternative layout.

Originally Posted by walt526

So the total cost would be $649.49, not $539. So if we're making an apples-to-apples comparison, the price difference is more around $100 than $211. And a good chunk of that difference is because European VAT tax rates are higher than US sales tax rates.

If anything, enTourage's margins on international sales are *smaller* than domestic (which I doubt are very large to begin with), particularly when expected costs for warranty work and such are considered.

1) OK, the price difference is smaller, but it's still ridiculously high. I still need to pay at least $100 more than in USA. And still, there is no assurance everything will work from Poland. So again, just like before with other companies, I'll have to pretend I live in Germany or UK, to buy eDGe and apps and books...

2) I don't know what profit they're making on each eDGe, but it doesn't really matter from my perspecitive. All costs included eDGe will probably cost $800-900 in Europe! And that's simply too much. It's a price for a very good laptop. I don't know what entourage has to do, but they have to do something to cut the price.

Originally Posted by robot

p.s. the real reason for you my be that it's not support all european language (especially on e-ink side). I mean the keyboard layout is in english, and it's not easy to find an keyboard with alternative layout.

I think this is only a temporary delay for shoppers. Most Poles using modern electronics are already used to 'losing' Polish fonts and diacritics, and we can live with that without any problem. And if there are any funny signs instead of our native letters a quick patch should fix those easily. So, it may be a potential problem but only for people unaccustomed with modern gadgets, who probably wouldn't dare/dream to buy eDGe in the first place.

Originally Posted by robot

Probably if they learn from big companies and send EE directly from manufactor (located in china) it will allow lower the price. As for resellers, it's not interesting for them to sell something if price were not raised to about 20%.

I totally agree. Living in Poland, central Europe, I buy paper books from USA as they're cheaper than from UK. Postage is very often more expensive from UK! And we're talking about posting from shops not what individuals can do with their post.

And electronics... I also bought a few items directly from China as the shipping was below $15 or even free of charge!

So the bottom line would be... enable European buyers to shop in the USA entourage store, change taxes and whatever else must be done, and ship to us directly from China. When clients are happy and buy a lot, producers are happy because they make the big bucks. Everyone is happy and we're one big happy family

Originally Posted by Melkor

I don't know what profit they're making on each eDGe, but it doesn't really matter from my perspecitive.

Fair enough. But that contradicts your original post when you claimed:

Originally Posted by melkor

So my advice to entourage is, lower the price and you'll make an unforseen profit.

They won't be making any profit if they're selling more units, but each of the units at a loss.


Most of the factors that contribute to the higher cost (institutions in European, structure of taxes, etc.) are completely outside of enTourage's control. As for the rest, there is an added cost to supporting devices halfway across the globe and ~$100 seems about right (again, probably conservative).

Again, I don't think that the eDGe will penetrate European markets at it's current price, and I doubt that they're expecting very many European sales... but I'm pretty sure that there isn't much opportunity for them to lower their costs in order to pass them onto consumers.

And as robot has noted, electronics in Central and Eastern Europe are much more expensive than the US, even from major manufacturers. My future roommate is coming from Bulgaria and we briefly discussed whether it made sense for her to wait to buy a laptop until after she arrived. When I sent her prices and specs on what something basic for a student would cost in the US, she was convinced that one of us was making a currency conversion error.

Originally Posted by walt526

Fair enough. But that contradicts your original post when you claimed ...

They won't be making any profit if they're selling more units, but each of the units at a loss.

You cought me here

My answer would be... I don't really care if they make a huge profit or a small one. As long as eDGe is too expensive, they're not going to make any.

And I do agree that they can't be selling with a loss. They're not a charity. But selling even with a zero turnover will be profitable!

Why? When/If they sell eDGe without any profit, they still:
1) win over competition, as people will have eDGe rather than anything else in their pockets.
2) this puts forward Android and Android apps which in turn enhances eDGe on the market.
3) customers with eDGe will be buying apps and books and magazines and God knows what else via entourage store!

And there is nothing better than a devoted customer. It works for mobile phone providers. They give you an expensive phone for next to nothing, and you 'repay' them by small continuous cash flow over the years.

I won't argue that there are advantages to eDGe staking out a more aggressive position outside the US, but that would require some measure of additional capital to fully support it. Yet additional capital means additional risk. Since enTourage is a privately held company backed by venture capital, it's most likely the case that they feel that at this point it's not a good business decision.

You can take a gander at the management team of enTourage: http://www.entourageedge.com/about-u...y-profile.html

It seems to me that these guys have the background to know what they're doing and have a pretty solid business plan in terms of focusing on building up a network of partnerships with the education and publishing industries. Ultimately those partnerships going to be the key to enTourage's future and they require a lot of attention to properly cultivate. Since it's a different set of people at most prospective companies who are involved in the US and Europe, it makes perfect sense to me that they focus almost entirely on the US at this point. As with most things in life, when building a business it's often better to do a few things well than many things poorly.

Finally, purely my own speculation, but I suspect that the enTourage ebook store will never provide a significant revenue stream--except for possibly etextbooks. For me (grad student), almost all the material that I read on the eDGe are PDFs of academic journals, which I can download freely. I've owned the eDGe for over two months and this past weekend was the first eBook purchase that I made: ~$10 for pleasure reading, and I don't expect to be making many more purchases in the foreseeable future (not dissatisfied in any way, just broke). Now I'm just one user, but going through the "Introductions Thread" a fair number of eDGe users are academics and probably have similar usage patterns. Furthermore, there is a great deal of competition from many online retailers looking to establish a position in the ebook market, so there aren't very high margins to be realized unless enTourage somehow landed an exclusive (which I'm hoping that they can somehow do for my upcoming semester textbooks).

Your point #3 is the so-called "Gillette Razor Model": sell the base at (or even below) cost but then turn a profit on the blades. I'm not convinced that such a model is viable for the eDGe since they have to compete in a very tight market for ebook sales. In other words, the model works for Gillette because they're the only ones that can (legally) manufacture and sell blades based on their design--essentially, they control the content. Therefore, to the extent that Gillette can successfully differentiate their product from competitors, they have an opportunity earn an economic profit. But enTourage has no such analogous advantage--quite the opposite, in fact. They have limited ability to determine market price, which reduces their economic profit potential to near zero.

Which is a longwinded way of saying that I'm not sure that the profit potential from selling content is as large as one might initially think, which reduces the incentive to maximize sales volume.

walt526, thanks for this extensive explanation. I don't know if you're right, but if so... Then it's great because it seems that entourage has a plan and a goal and they're getting there, step by step. Unfortunately this also means that I'll be left out at least for a forseeable future.

Anyways, I'll write to entourage directly - although I already did in a few e-mails with general questions - asking them to reconsider their policy towards Europe, especially central Europe.

I'm not a specialist in IT or economics, and I don't know what and how must be done, but if I could buy eDGe together with content directly from USA store, and the posting would be done from China, from the manufacturer, it seems the price could be cut down quite a bit. $800-900 is simply out of my reach.

I know the comparison to a netbook is partially inadequate, but I can get a modern netbook from a store on my street for less than $300.

You can buy one now in the Netherlands:
http://www.centralpoint.nl/zoeken/enTourage+eDGe/

Originally Posted by borisb

To put it simply, enTourage is just starting out as a new company, with a new product. It will take time to scale up, and as it does, prices should drop.

Having said all that, there's nothing wrong with complaining about the high prices. As I recently heard someone wisely say "Something is frozen (totally unchangeable) only until enough heat is applied".

I'll repeat my previous comment, "I hope you're right."
Still even though entourage has/may have reasons to keep the price high (at least for some time), it doesn't change the fact that the price is too high.
I don't want to advise them on renegotiating deals with distributors or such. I can, however, ask if the margin isn't a bit to big. At least for the Europan market.
With this price the whole sale in Europe will be 'mediocre' or 'petty'.

For the same $760 base price (todays conversion of €599) of eDGe itself I can buy in a nearby shop in Poland:
laptops: Acer 5741 i5 4GB 500GB Win7... or Toshiba L505-13D i3 4GB 500GB Win7
netbooks: Booklet Nokia 3G or Toshiba T130-10G or Acer 3810TZG

The most expensive e-book reader I could find (Onyx Boox 60 with 2GB SD + touchscreen + sleeve + 4 e-books) is for $465. For the remaining $295 I can still buy an N450 netbook.

The bottom line is still the same. $760 for eDGe is way too much. Especially when this is before posting and upgrading (different colour, SDHC, USB keybord, etc.) which will take at least extra $50.

Originally Posted by pietg

You can buy one now in the Netherlands:
http://www.centralpoint.nl/zoeken/enTourage+eDGe/

So the price is €603 = $765.
I know that $122 in that price is VAT tax, but whether it is tax or not, I need to pay that out of my pocket. Too much...

huge prices! Can't we find them somewhere else for a lower price?