As I have been reading recent statements about “killing” competition through low prices, I’m reminded of a statement from Jeff Bezos, CEO of Amazon.com who summed up his business philosophy thus:
There are two ways to build a successful company. One is to work very, very hard to convince customers to pay high margins. The other is to work very, very hard to be able to afford to offer customers low margins. They both work. We’re firmly in the second camp. It’s difficult—you have to eliminate defects and be very efficient. But it’s also a point of view. We’d rather have a very large customer base and low margins than a smaller customer base and higher margins.
Andrea Rossi has said recently that he will guarantee the lowest possible price for E-Cat technology, putting him firmly in the camp of Amazon, along with many other businesses (e.g. Wal Mart) who survive and even prosper using a high volume/low profit margin strategy.
With a product as unique and universally attractive as an E-Cat (who doesn’t want cheap energy?) it might be possible to charge a premium price and be very successful if you are the only game in town — and perhaps that is what Rossi is doing right now with the $2.6m 1 MW plants while he can. Once competition is in the marketplace things will be very different, and Rossi seems to be positioning his company to stay ahead through the Amazon strategy.
One thing about energy is that it is really an invisible commodity. You don’t see heat or electricity, so it’s hard to think of a way that a company like Apple would could make a LENR device look attractive and charge for the design aspect — unless you can make a generator an object of art. Most people, I would think, will be happy to have E-Cats sitting in the basement or outside a house where they can enjoy the benefits of the energy it produces without having to look the machine that makes it. Most people only look at their boilers, furnaces or air conditioners when they are broken.
With energy it is ultimately the cost that counts, and if Rossi and Leonardo Corporation can actually guarantee that they will always provide energy at the lowest possible cost they shouldn’t have a problem dominating the market.