[CR]Suntour / Berto's theory

(Example: Bike Shops)

From: Donald Gillies <gillies@cs.ubc.ca>
Date: Thu, 20 May 2004 09:31:21 -0700 (PDT)
To: classicrendezvous@bikelist.org
cc: gillies@cs.ubc.ca
Subject: [CR]Suntour / Berto's theory

I don't think that one simple sum-up like Berto's statement "Suntour didn't charge enough" can tell the whole story.

In the early 1970's, Suntour exported as an aftermarket supplier. In that niche, they had to charge standard markups (not exhorbitant ones) to get established. Just about every simplex derailleur shipped in the 1970's was eventually replaced by a Suntour. I remember that Simplex prestige cost $4.95 and Suntour VGT was $12.95. Yes, a VGT sold at a bargain price, but then again, it had to replace a device that was already working (just not working as well as possible). As a kid in the 1970's, $12 - $15 was about all that I could bear for an upgrade like this.

By the early to mid-1980's, suntour was a major OEM supplier of boutique mid-range and high-range components like campy. However, the grouppo strategy that campy invented was a key innovation that Suntour never fully embraced. Just like "Spidel", it just doesn't work to get a "Superbe / Cyclone" consortium together and rebadge components under a single grouppo name. There is too much incentive for the consortium to undercut prices on their own house brand. The easy strategy to defeat the consortium is to integrate the parts, like Shimano was doing. In other words, internal price-competition and coordination are the downfall of such a consortium.

Suntour needed insurance to survive the onslaught of SIS in the mid 1980's. They had one chance with Accushift; they needed two chances. One form of insurance would have been to charge more and build a cash pile (can you say "Microsoft" or "Qualcomm" ??) . Another form of insurance would have been to go on a corporate buying spree, and to purchase or merge with SR or Sugino in order to get big and make the grouppo strategy successful. Small companies cannot live on superior R&D forever - eventually, there is a misstep.

- Don Gillies
San Diego, CA