Geo Week News

October 14, 2015

Why GPS Could be a Red Herring

Red Herring

Given that many of us were participants in the GPS market during the late ’80s and ’90s, it should come as no surprise that it’s common to view the laser scanning market in similar terms. As a result, we often cite the fact that every cell phone has GPS onboard as an indicator of the impending ubiquity of LiDAR. However, after a few recent conversations with friends that have been in the scanning business for many years, I’m starting to think that the way mobile phones have spread GPS may just be a red herring.

The lesson we should take from the mobile device is not that it will spread LiDAR the way it spread GPS. The lesson we should take is that the mobile device might have something to teach us about sales strategies.

Think of it this way: Most laser scanners are only marketable about 2-3 years, just as long as a mobile phone. Oh, they’re still usable, but they can’t be marketed due to how far the new model(s) have surpassed them in convenience/speed/range/etc.

When you look at the technologies this way, doesn’t it seem that laser-scanning industry would be better off using the sales model that we’ve been using to buy cell phones? The companies take a bit of upfront money, send a monthly bill, and offer a guaranteed trade-in value at a defined date. I am confident that there is a market that would choose this way to purchase scanning hardware. I also think that it would open the market up to more participants.

I’m just not sure if the laser-scanning manufacturers could continue profitably (but that’s mostly due to lack of data concerning production costs, R&D costs, etc.) On top of that, I’m fairly certain that this would bring scanning costs down, and I am a bit concerned about that given how many of us tread water as it is!

It’s true that when you consider the cost of most scanners, they are much more in line with an automobile than a mobile phone. While that may seem to make this proposed pricing model less viable, the reality is that it would still work, since many companies lease automobiles as opposed to buying them.

That analogy brings some other factors into the equation. One of the reasons that car leasing is popular is because maintenance issues are covered by the manufacturer, but that does not seem to be as big of an issue with scanners. However, the tax differences between leasing and owning/depreciating can be very different company to company, and that alone may be the deciding factor in some cases when you are choosing whether to purchase or lease.

Maybe I’m just getting used to this new subscription economy, or I’ve perused Consumption Economics one too many times, but moving from CapEx to OpEx seems to be the prevailing trend in pricing models. The truly interesting part about this is what it could do to the design criteria for new hardware. What might the manufacturers change if they knew that the game was to build the best unit at the lowest cost that only had to reliably operate for 24 months?

Lastly, there is the capacity issue. The examples that I’ve used thus far (automobiles and mobile phones) have a market saturation point that is much higher than laser scanners. How many scanners (and similarly, scanning companies) do we need on this planet? To be clear, I don’t think that we are anywhere near capacity at the moment. It’s my personal opinion that the current capacity is due to the high cost of getting into the game. But there has to be a limit and if it’s too low then these new pricing ideas may be dead on arrival.

I’d love to hear some of your opinions on this. If it all possible, use the comments section below. If you’d like to share your opinion but need to keep it private feel free to send me a message via LinkedIn.

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