Yeah, from what I've heard cost of reagent will be reasonable and inline with existing market pricing. What that actually shakes out to? I have no clue. But I'd have to assume they understand the dynamics of all of this and price points. Alot is to be seen on how this actually rolls out, still alot of "what ifs".
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They bought out abc and now distribute it so there’s that lol..
They did not buy out ABC. ABC is moving distribution of premixed reagents to Coralvue only since they don’t have the capacity to do that anymore. ABC will still be selling the mix yourself kits since those are much easier to package and it’s way less volume in Sales.
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Sure did
Dom_P
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If I understand that correctly and Coralvue has become the sole distributor for ABC reagents and they haven’t jacked up the price of those reagents in doing so, then one would think their Maven branded reagents would be in line with the other ABC reagents they distribute. Otherwise they would create negative incentives to purchase the Maven. Again, time will tell
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May be worth expanding on this.
Printers:
Inkjet printers suffer from dried nozzles. So there is some validity in the cleaning process and/or periodic purges. There is certainly valid concern that it is done in excess, leading to inflated consumables usage. The longer the printer site, the more likely it is that the nozzles will clog with dried ink. Use it or lose it....
Laser printer. There is waste toner and depending on topology the transfer rollers may need to do a small purge, but as with inkjets, there is some valid concern that this is done in excess to inflate consumables usage. They can sit indefinitely, though settled toner may need a shake to prevent clumping. Some printer due this and it causes waste, literally shaken out of the cartridge and then the roller must be purged as well. There is no need to "regularly" use a laser printer.
Automated Reef Testing:
GHL - Profilux. There is no "waste" consumable. The pH probe is kept wet between tests. It could dry out if tests are not done for weeks at a time. The reagent is acid. It does not clog tubing.
GHL - ION-D. The "probe" is an ION-Selective sensor. It does not use "reagent" -- it uses reference solutions. The probe itself has a shelf life and MUST be rinsed very regularly or it will stop working. The probe must also have reference solution flowing through it or (over it, in some designs) during sampling. There is a lot of waste and there is a very real requirement for the probe to be "used" daily, or even more frequently. Use it or lose it.
Other pH based KH testers - If the probe is kept wet, then it will degrade at its normal rate. Reagent is acid, it will not clog tubing. There is no requirement to do regular tests.
pH based KH differential tester - Uses CO2 equilibrium There is no reagent and like the other pH based testers -- there is no need for regular tests.
Colorimetric Titration Testers - This is where things get messy. Some reagents have a high propensity to crystalize or create deposits as they evaporate or residuals react in shared fluid paths. Some designs are better than others, but there is a realistic requirement for somewhat frequent testing to prevent clogs or partial clogs.
RoanokeReef
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Maybe ... if that was the case why spend the extra time developing a way to scan in the reagents. This costs time and money. I'm disappointed this is the approach they're taking all while distributing a generic for the competition.
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The general marketing dynamic would be
1 - undercut (or match) competitors cost per test in order to drive hardware sales via competitive marketing
2- If market adaption becomes large enough, then increase cost per test irrespective of competitor's. The marketing push moves from "cheaper to operate" to "premium option, higher quality"
The DRM reagents are an absolutely critical piece for #2.
So we can likely expect that the cost per test will be reasonable out of the gate, compared to other offerings. It would be a tough sell for them to jump straight to "premium" pricing with no track record -- but not unheard of.
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Hardware sales alone will not support product profitability, especially with cloud service hosting perpetually eroding revenue. The market is too small for long term viability.
The vendor locked reagent ensures recurring monthly revenue and prevent them from being undercut.
They also allow them to raise prices to a captive customer if there is high enough adoption and market dependence -- but the foremost reason is to ensure RMR without being undercut.
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Dom_P
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There can be multiple reasons for those choices.
For example, support costs. They might feel that if they limit the types of reagents that they can better support their client base because they have full control over the reagents used.
Or it might be as others have speculated to lock maven users into their ecosystem and to generate recurring revenue from the sale of reagent. In this case, if the reagent cost is inline with “generic” versions then there will be many users of the product who don’t care. Whereas others might worry about the device becoming unusable should CV stop selling those reagents
Dom_P
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I don’t disagree. In case 2, there’s always a limit to what the client base will tolerate before they decide to move to a less costly alternative (depending on how cost sensitive the client base is).
This seems to be the excuse the other camp used. First it was that the lines would clog and so you MUST test daily, now the line is....the reagent expires in exactly 60 days.
Next up - you have to use it or we charge you double on your next batch.
Sure did
This was never confirmed by Coralvue publically that I know of.
There are documented cases where lines have had clogging issues from dried reagents/saltwater for the other brand.This seems to be the excuse the other camp used. First it was that the lines would clog and so you MUST test daily, now the line is....the reagent expires in exactly 60 days.
Next up - you have to use it or we charge you double on your next batch.
For the maven, they are focusing on using 1) RODI for rinsing lines between tests 2) air pumps to purge RODI post rinsing 3) and i believe (but don't quote me) using a combo of pumps/air to return unused reagent back to bottles. I know from my discussions 1 on 1 with CV at RAP, they have been doing alot of testing when it comes to line purging/cleaning and preventing cross contamination & residual liquid in the lines.
Yeah, I think one reason for controlling use of their reagents can be a method of cost control on the support side. Support of a complex testing machine can quickly become a ballooning cost. By controlling more variables of the ecosystem, you have less possible variables that need to be verified if someone's unit isn't working. Locking the reagent means you know that they are using a (hopefully) controlled reagent, thus less focus on verifying the basics has to occur, which means cost of support goes down. You don't know how many iV users I've helped that their issues came back to incorrectly mixing the acid reagent, and a lot of times I would jump past that and assume people knew what they were doing. Only to circle back and find that was the issue.
Also traceability on reagent lots could help track issues/trends from support back to possible reagent lot issues. Now i know there's likely privacy stuff and the like that goes around that, but it seems possible with the data of 1) support issue types and correlating 2) reagent lots could also pinpoint broad issues faster (which means saved support $s).
I know the main thing to point at is "control" of reagent and "price gouging", but there could be other factors to consider for this proposed method that they mentioned in the video a few months back.
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There is some validity in both clogging and expiration - but as with the pinter OEMs, they have a vested interest in pushing the envelope. Their reasoning of "easier support" is also valid, but only goes so far as well.This seems to be the excuse the other camp used. First it was that the lines would clog and so you MUST test daily, now the line is....the reagent expires in exactly 60 days.
Next up - you have to use it or we charge you double on your next batch.
Many of the common reagents for these tests do have a shelf life. Of course that depends on how they are stored. I have a pretty extensive list somewhere. At one point I decided I was going to start making my own ReefBot reagents and use the hardware with my own software. I have no time -- so it was a silly idea.
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Handled with the simple
"We offer no support for use of 3rd party reagents"
They can't legally refuse warranty claims based on 3rd party, or you opening a cover with a sticker that says "warranty void if opened" etc. But they can (and should) refuse support.
Traceability can be done without DRM. They are two very different things.
The purpose for DRM consumables or monthly licensing is primarily for the purpose of a profit center and predictability. It ensures RMR. It makes everything from accounting to production cadence (be it reagent, or server resources) predictable.
FWIW - they could raise the price to 10,000$ per single test and it would not be "price gouging". That phase is almost always misused to convey "greed" or "expensive" In any case, it has specific legal definitions in most jurisdictions -- but in general is defined as raising prices for essential goods and services to an unreasonable level in response to a an emergency.
TLDR: An aquarium tester is not an essential good or service even if there is an emergency and therefore the vendor jacking prices to the moon is not "price gouging" -- it is their right, even if you are a captive customer and have no other choice.
Dom_P
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This is very true. Network switch vendors, for example, do this with OEM vs third party optics/transceivers. However, that doesn’t stop customers from opening support cases and as such can still become a burden on the vendor. CV may not want to deal with that given the small market they serve.
There’s also no dispute that it also serves as a recurring revenue source. I don’t know what the margins are on that however or whether it would drive any real profitability compared to the margins on the devices they sell. I would expect the devices to be very high margin at the price points they are offered given my understanding of the components they contain. This isn’t really a razor/razor blade model where the razor is given away to drive a razor blade business.
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RMR - be it subscription or consumables typically serves as the primary profit center. Margins may be healthy on hardware, but sales are tiny and non-recurring.
The reef controller market is small and saturated. There are only so many hardware sales per year that can happen. They are durable goods, not repeat purchase items. Sales will ramp to a point, then tail off because there are fewer viable customers to compete for. New product releases help, but that also means forcing obsolescence or real forward innovation go drive new sales to the small niche.
Back the controllers -- each sale represents load on their cloud services and a perpetual cost that scales with time. That recurring scaler cost erodes revenue, perpetually.
The subscription based services and consumables offset that cost and restore revenue. It is essential to the business model and short of obsolesce or irresistibly new products, ends up, in the long term, being the only real revenue stream. That is why proprietary consumables become so important.
Caveat: CV and Bertram can offset some of the limitations to an extent (absorb losses) by using the controllers to expand their market reach and portfolio. Notice that most "tech" vendors in this space are being rolled up, or going under. Those doing the rollups have RMR based business models (consumables and subscriptions). Margins are slim and both fair and unfair (China) competition is stiff.
Dom_P
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Generally speaking, I’m not disputing any of these points. I’m only wondering whether the recurring profit margins for a testing device that not all of their existing clients will even purchase makes a dent in the overall profitability of CV.
I also wouldn’t expect their cloud costs to be all that high. If all they are storing is device configurations then I’d venture a guess that a couple of VMs and some storage would probably be enough to serve thousands of devices. Unless I’m missing something obvious, I can’t imagine the configs that need to be stored in the cloud for these devices would be more than a few megabytes… so maybe a few gigabytes of storage.
EDIT: also this isn’t CVs only product line. If they derive profitability elsewhere then it’s entirely possible they are concerned less about that which is derived from Maven reagents
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