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Rosetta Stone, Inc. Message Board

  • ekle_2000 ekle_2000 Mar 5, 2011 12:01 PM Flag

    Why I DONT like RST

    It continues to blow my mind that "investors" do not do any homework.

    1. Subscription - Do you know what that actually is? or where that money is coming from?
    RS's "subscription" is for the online games and online tutors. When the customer buys the program they get a set amount of time to use play these games and get online tutors. IMPORTANT: the amount of "free" use of these is based on how many levels they purchase. If they get 5 levels they get 15 FIFTEEN months free. For one level I believe it's 3 mths or so.
    This is important because the "subscription" income seen ONLY IF and WHEN the customer reaches the end of that set time AND DECIDES to continue it, i.e., paying to renew.

    IMPORTANT: The customer MUST have high-speed Internet connection to play games and have the online tutor. If they dont, or, if they choose not to take advantage of those online services.... there will be ZERO subscription income

    IMPORTANT: RS has never said (of course) how many users are actually using the online services. I bet very few.

    IMPORTANT: V4 totale has up to recently been only available in the US and JUST available in Japan.

    Where is alll this income going to come from?

    On a side note, they ARE testing true subscriptions (3 and 6 mth) ONLY for those language with 5 levels but not US/UK English (in the US market)
    This has only recently began, and not available at the kiosks.
    They had these in the past but eliminated them btw.
    Btw, just checked out the other intl sites and they are offering 6-12 mth subscriptions.

    And for the final point. it is international where all the true competition really is.

    RS cant even get their US market halfway right, what makes you think they can do it international.
    RS has been a true company for at least 10 years yet still cannot get their !$#@ together.

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    • You right, but we are not arguing here if the software is good are not.

      We are discussing IF the company has any strategic sense & the fact IF they were innovative and created a true app they would have sold sooo much more at much more profit.

      Take for example their demos disks. Those cost 1$+ to make not incl. shipping. They constantly advertise those demo disks and know for a fact they are sent out by the thousands. Think how much they would save & how much more exposure they would get if they made a simple demo app for each language. Thats what i call innovation.

      What exactly is "segmentation", I have yet to see any kind of definition for that term.

      And delivery IS their challenge. Do they continue to sell yellow boxes w/ risk of piracy or to mention all the overhand to make those boxes not to mention shipping
      Or, do it all online (better margins).
      Pricing (profit) is directly related to delivery method

    • Great now you are using definition refinements to support your case. The app is the companion, the complement, the exception of the main learning system. Takeaway: Learning a new language is an endeavor, not easily achieved with mobile devices and free apps. For those who are outcome driven, the binary decision to go forth or not with an investment in RS tool is a function of the expected time, effort, and efficacy to the cause. The tool provides structured learning and is a proven system. Segmentation and pricing is their challenge not the tool nor the delivery model (SaaS).

    • RS was taken public with the sole goal of flipping it for a profit. Thats what VC companies do, and they also tried to do a secondary too (but failed).

      They just concentrated on selling yellow boxes with zero forward thinking about new technologies coming. They thought it would be a quick flip and money would be made. No need to look at the future.

      None of the managements has any experience with languages (ex. CEO). Matter a fact, many come from AOL brought over by COO Eichmann who is no longer there. We all know about AOL. RS has always been a follower & always takes way too much time doing things.
      Thats why there are no apps for iphone, ipads or anything else. Instead they spend a bunch of money on bs games that no one uses. And most importantly, thats why so much money is/was put into ads & marketing. Brand recognition.

    • And that transition would require a radical restructuring of their business model and cost structure. To do institutional sales, you will need a large commissioned sales force and much better service and support than they have now(there are a lot of complaints in product reviews about RST's technical support). And paying all of those online tutors is a very different business model than with just packaged software.

      And it's not like RST has any big built in advantage in that market either. As with apps and other packaged software, a lot of what they are offering is free or much cheaper elsewhere.

      And then you still have to restructure the consumer/retail part of the business. That probably means shrinking distribution, imo, which will be costly due to potential writeoffs.

      The huge loss that the company guided to in Q1 is telling you that their business model is in trouble, imo. But you're right, 'investors' often don't do their homework anymore.

 
RST
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