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#2008235 - 01/02/13 09:58 PM Re: Steinway News [Re: 4evrBeginR]
4evrBeginR Offline
1000 Post Club Member

Registered: 06/27/09
Posts: 1607
Loc: California
OK, I did another thought exercise. Don't ask me where I got the numbers. It's a hypothesis. If you don't like these numbers, do propose more valid ones. Besides, this is a thought exercise for discussion, not a Havard Business Review case study.

So, if Steinway customers average $300,000 annual income, which is top 3% according to the Wall Street Journal, then the TAM (total addressable market) for Steinway in the US is about 9,000,000 individuals. If we use 4 people per household, that's 2.25 million households that potentially could become a Steinway household. If 10% of these households buy Steinways, then they could sell up to 225,000 pianos. If each household buys one every 50 years, that's 4,500 pianos a year Steinway could sell.

So the fact that Steinway sold only 1,000 pianos last year in the US suggests only 2% of US households that could afford a Steinway are buying a Steinway. If your marketshare is only 2% of your TAM, how long can you keep up that product line?

Of course, if Boston and Essex is killing it, then Steinway would be able to subsidize its Steinway products with its Boston and Essex products. I don't have any idea how well Boston and Essex are doing.

I am a Steinway customer, and I wish them well. I just don't see how they could survive as an independent company. It would make business sense for Samick to take over the Boston line, close the NY factory, and move production to Hamburg, or vice versa. The 2% of that top 3% of the US income bracket are not price sensitive to the difference between NY and Hamburg products. This whole TN thing makes absolutely no sense. If you are marketing to the upscale you need to be associated with certain cities, NY, Paris, London, period.

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#2008275 - 01/02/13 11:34 PM Re: Steinway News [Re: Plowboy]
Plowboy Offline
2000 Post Club Member

Registered: 06/26/08
Posts: 2384
Loc: SoCal
If you dig through some of their annual reports, (maybe a year ago?) they mention that Boston was not doing so well. It's expensive to build in Japan was the thought.
_________________________
Gary

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#2008414 - 01/03/13 08:34 AM Re: Steinway News [Re: pianoloverus]
Larry C Offline
Junior Member

Registered: 12/27/12
Posts: 17
Loc: Naples, FL
I worked for a few Fortune 100 firms and there are several non-invasive ways of determining a customer's net income / net worth ... and I agree w/ the line of thought that Steinways are just pricing themselves out of the market ... that said, I bought a Steinway K-52 upright for my home and a Mason and Hamlin upright for my 2nd house each in the last 3 years ... Both American made pianos and I had a preference to an American made piano ... the Mason was 60% the cost of the Steinway and if I had to do it again, I'd buy two Masons they are a better value in my opinion

In this day where digital pianos are the volume sellers, Steinway must be more competitive and (in my opinion) they should stay American based as it is a deciding factor for many
_________________________
Steinway K-52 upright
Mason & Hamlin 50 upright
Yamaha CP5 keyboard

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#2008433 - 01/03/13 09:20 AM Re: Steinway News [Re: 4evrBeginR]
Steve Cohen Offline
Yikes! 10000 Post Club Member

Registered: 05/26/01
Posts: 10523
Loc: Maryland/DC/No. VA
Originally Posted By: 4evrBeginR
If your marketshare is only 2% of your TAM, how long can you keep up that product line?


The same could be said of Rolls Royce, Ferrari, and the high-end German piano manufacture's who "survived" despite two world wars that devistated their entire market.

Does the fact that Steinway has "survived" for 150 years give you a hint that your suppositions are poor?

Perhaps you should argue that bumble bees can't fly.
_________________________
Piano Industry Consultant- http://www.linkedin.com/pub/steve-cohen/6/b92/b80

Consultant & Contributing Editor - Acoustic & Digital Piano Buyer

Jasons Music
Maryland/DC/No. VA
Since 1937.

www.jasonsmusic.com
My postings, unless stated otherwise, are my personal opinions, not those of my clients.

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#2008503 - 01/03/13 12:06 PM Re: Steinway News [Re: 4evrBeginR]
AndyJ Offline
Full Member

Registered: 09/29/12
Posts: 219
Loc: Near Dayton, Ohio USA
Originally Posted By: 4evrBeginR
No, not entirely. My son is a senior at UC Berkeley, and I am paying his tuition. I wish it was a vivid imagination, but as I recall when I applied to Berlekey myself, an engineer's salary was about $40K a year, and Berkeley cost about $6K a year. Now, an engineer's salary is about $80K to $100K a year an Berkeley cost $33K. So if income kept up with inflation, an engineer today should be paid something like $210,000 a year with a senior engineer making $300,000, instead. I do not believe that it is any secret that income in real terms has been strinking since 1980 far and away more than the inflation index published by the government would account for. You just have to look at prices of everything, add them up and know it is not 2-3% per year. Economic calculus is not required.

Wow. My in-state tuition at Berkeley in 1973 was $637.50/year. My brother's tuition at an Ivy League university was $4,000/year.

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#2008587 - 01/03/13 02:43 PM Re: Steinway News [Re: Steve Cohen]
4evrBeginR Offline
1000 Post Club Member

Registered: 06/27/09
Posts: 1607
Loc: California
Originally Posted By: Steve Cohen
Originally Posted By: 4evrBeginR
If your marketshare is only 2% of your TAM, how long can you keep up that product line?


The same could be said of Rolls Royce, Ferrari, and the high-end German piano manufacture's who "survived" despite two world wars that devistated their entire market.

Does the fact that Steinway has "survived" for 150 years give you a hint that your suppositions are poor?

Perhaps you should argue that bumble bees can't fly.


Neither Rolls Royce nor Ferrari were independent for a very long time. Rolls Royce were at times owned by Ford and VW while Ferrari is owned by Fiat. This is the model for most high end niche brand today. High end niche brands need to seek shelter under the wing of a large mass market company. If that's surviving, then Steinway will probably survive. Steinway by Pearl River, haha. Just kidding.

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#2008596 - 01/03/13 03:01 PM Re: Steinway News [Re: Nash. Piano Rescue]
Del Offline
5000 Post Club Member

Registered: 09/04/03
Posts: 5317
Loc: Olympia, Washington
Originally Posted By: Nash. Piano Rescue
Steinway currently has an excellent workforce to draw from in NY that relies on efficient public transportation. There is none really outside of Nashville. There is STAR which has one rail car and that is it. There is no way that they could get good workers here unless they are moving their good experienced workers too.

Disclaimer: I have no idea whether Steinway’s management is considering any kind of move or not. Offhand I can think of several reasons to support arguments both for and against such a move. But this is not among them.

Skilled and dedicated workforces are not found; they are made. Competent people are hired, they are trained well and they are paid and treated with reasonable respect. I have no doubt that Steinway pianos—perhaps with some minor revisions to the assembly process—could be built just as competently in Tennessee as they are in NYC. Of course there would be problems with the transition; there always are with transitions of this sort, but they can be managed and minimized.

And, while I am a vocal advocate of efficient and useful public transportation systems, it is unlikely that the lack of such a system would be a critical factor were assembly to be relocated to an area like Gallatin, Tennessee. It’s been close to 25 years since I’ve driven through the area but I rather doubt the cost of owning and operating a private car is as high in Gallatin as it is in NYC. Nor is it likely that traffic congestion is quite the same problem.

ddf
_________________________
Delwin D Fandrich
Piano Research, Design & Manufacturing Consultant
ddfandrich@gmail.com
(To contact me privately please use this e-mail address.)

Stupidity is a rare condition, ignorance is a common choice. --Anon

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#2008630 - 01/03/13 04:26 PM Re: Steinway News [Re: Del]
Ed Foote Offline
1000 Post Club Member

Registered: 05/03/03
Posts: 1228
Loc: Tennessee
Originally Posted By: Del


And, while I am a vocal advocate of efficient and useful public transportation systems, it is unlikely that the lack of such a system would be a critical factor were assembly to be relocated to an area like Gallatin, Tennessee. It’s been close to 25 years since I’ve driven through the area but I rather doubt the cost of owning and operating a private car is as high in Gallatin as it is in NYC. Nor is it likely that traffic congestion is quite the same problem.
ddf
[/quote]

Hmm, we park them in the fields around here, if we want. Or in the yard. Heck, most people I know have had reason to drive in their yards at some time or another...
And traffic jams in Gallatin ?? Whoo hop, I heard that one guy last week had to sit through TWO green lights before he could get through the intersection, so who knows what the world is coming to?.
Regards,

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#2008633 - 01/03/13 04:32 PM Re: Steinway News [Re: Ed Foote]
Del Offline
5000 Post Club Member

Registered: 09/04/03
Posts: 5317
Loc: Olympia, Washington
Originally Posted By: Ed Foote
Originally Posted By: Del
And, while I am a vocal advocate of efficient and useful public transportation systems, it is unlikely that the lack of such a system would be a critical factor were assembly to be relocated to an area like Gallatin, Tennessee. It’s been close to 25 years since I’ve driven through the area but I rather doubt the cost of owning and operating a private car is as high in Gallatin as it is in NYC. Nor is it likely that traffic congestion is quite the same problem.
ddf


Hmm, we park them in the fields around here, if we want. Or in the yard. Heck, most people I know have had reason to drive in their yards at some time or another...
And traffic jams in Gallatin ?? Whoo hop, I heard that one guy last week had to sit through TWO green lights before he could get through the intersection, so who knows what the world is coming to?.

What?...he couldn't get the old beater restarted?

ddf


Edited by Del (01/03/13 05:15 PM)
_________________________
Delwin D Fandrich
Piano Research, Design & Manufacturing Consultant
ddfandrich@gmail.com
(To contact me privately please use this e-mail address.)

Stupidity is a rare condition, ignorance is a common choice. --Anon

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