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Skullcandy, Inc. (SKUL) Message Board

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  • uptabdowntab uptabdowntab Jan 21, 2013 2:14 PM Flag

    Why are barriers to entry increasing?

    I am still interested in anyone's thoughts on this topic.

    My opinion is that there is no barrier to entry. All anyone needs to do is buy one of the existing brands/companies....they are cheap. For example, MCZ (which I own some shares) has the Tritton brand which I'll bet someone could buy for less than $50 million. It is profitable and growing fast and has a nice high end niche. Or just buy SKUL, another cheap way to enter the market.

    I really wonder what Andrus was trying to say.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Buying an existing company is not an "entry" by definition. Entry is developing / sourcing, purchasing, packaging, shipping and invoicing / billing new product. This would include profitable price points, volume of sales, salaried employees, incorporation or registration as a business entity.

      I believe what Andrus was saying is that saturation and price points, SKU / shelf space availability etc. have become very competitive. Thus a barrier to entry (long term and profitable) The "5" players eventually he is referring to is the number that can survive as "players"

      He also stated the in house design (that includes the sound profile, and mechanical design not just strickers and colors) is part of the barrier FOR THE 50.00 - 100.00 plus bracket product.

      Sure someone can buy a set from china, stick their name on it, try to undercut everyone. Who is going to sell it?

      Just my thoughts....

      MCZ is a good company I am sure and they are a 30 million market cap .

      By the way I keep hearing disappointed Beats customers on the street. Suckered into paying too much for "new hip status", you don't hear that about SKUL. Loyal expecially in the markets they target.

      IMO

      Sentiment: Strong Buy

      • 2 Replies to michaelsistowicz
      • Was in the Verizon store yesterday discussing my cell phone. So I asked the sales guy about most popular ear buds as they carried lots of brands. He stated he sells the most skullcandy as they're the best for the money. Whenever I'm in a store and someone talkes about skul, it's always best quality for the money. He pointed to some Yurbuds and said he had never sold a pair.

        My takeaway continues to be a solid, well respected and liked earphone company. Their target price range of 50-150 is a great strategy. I believe the opinions of everyday people goes a lot further than a couple of analysts so far removed from this market.

      • Thank you for the detailed reply. It does seem like there are way to many suppliers and that consolidation must happen for this to turn into a consistently profitable endeavor.

        Sort of reminds me of the hard drive industry 15 years ago with a dozen companies....which is now down to only 2 or 3 .....and the profitability is now spectacular for the survivors.

        I wish I understood the level of technology inside a headset so I knew whether or not it is a true commodity or not. I'm guessing anyone can throw one together and get it to work at a low level but in order to make a good performing solid well-done headset it takes special design skill, engineering infrastructure, and more.

        Cheers.

 
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