Welcome
to 2009
By Tom Demerly.
From Left to Right, Jim Felt of Felt
Bicycles, Dan Empfield of Slowtwitch and Tom Demerly of Bikesport.
As a consumer, the more you know about the “inertia”
in the bike industry the more informed you can be about when
to get the best selection and pricing on a new bike. The shifts
that happen in the cycling industry are interesting to watch
and this is one of the most interesting eras in two decades-
and a strong opportunity for consumers.
There are three prominent factors affecting how
we’ll buy bicycles over the next year, what we’ll
pay for them and how easy they will be to get. These factors
will also influence what we’re comparing and ultimately
buying when we do go shopping.
First, the economy. The effect of fuel prices
on shipping and freight costs combined with the shrinking power
of the U.S. dollar against foreign currencies will accelerate
bike prices throughout 2009. Add to this the concept that bicycles
are a commuter alternative to gas powered vehicles and the value
of a new bicycle is rising faster than home values are falling.
In the last “recession” Forbes magazine listed bicycle
retail as one of 500 “recession proof” industries.
When discretionary income shrinks across all income ranges a
bicycle becomes a viable alternative to other recreational vehicles
such as boats, motorcycles, sports cars, personal watercraft,
etc. These factors make the bicycle more valuable than ever
across a broad range of categories. Bikes, as vehicles or as
luxuries, reside at the bottom end of any vehicle purchase:
Millionaires buy a $10K bicycle instead of a $200K car or boat.
D.I.N.Ks buy new road and triathlon bikes instead of jetskis,
a time share or a new SUV. People who just got a lay off notice,
have little or no savings and scrape to make the bills may park
the car and buy an inexpensive commuter bike. Rich or poor,
bicycles still sell.
Second, rising costs in the middle of the model
year during 2008 tightened bicycle supply in niche categories
including road and the fast growing triathlon category. Add
this to an increase in demand and values of bicycles stayed
high throughout 2008. Bike companies that calculated retail
prices based on what they were paying for materials, freight
and manufacturing before the first quarter of 2008 got an unpleasant
surprise as costs increased steadily throughout the following
two quarters. Costs on 2008’s went up at the supplier
level, but retails had already been established. The result
was manufacturers couldn’t afford to bring in more 2008’s
at 2008 prices. The solution: 2009 model year bicycles are on
the floor of some bike shops now- at prices adjusted upward
based on costs and demand. In addition to this, manufacturers
and retailers are trying to de-condition the consumer from buying
“year-end” models at a discount by drying up the
supply of current year bikes before the end of the year and
introducing new models earlier.
Third- the good news: Consumers have more choices,
all of them better. Component variety in the bike industry is
at a twenty year high with new and established component companies
fighting for market share. The component wars are competitive
and it is driving quality up.
At ground zero are the new guys on the block,
SRAM, with their SRAM Red component group. The news about SRAM
Red is good when compared to other established and even future
component kits. In short, SRAM Red works very well, is the lightest
full component groups available as of this writing. SRAM Red
incorporates features and benefits consumers want like carbon
fiber parts and ceramic bearings. SRAM may have timed the introduction
and compatibility of SRAM Red superbly as Shimano gets ready
to introduce their new 2009 Dura-Ace 7900. Bicycle company product
managers have suggested that Dura-Ace 7900 has limited backwards
compatibility with previous model year 7800 series Dura-Ace
components. SRAM Red is largely compatible with 2008 and before
Shimano Dura-Ace components such as cogsets and hub bodies.
This cross-brand compatibility between “old” 2008
Dura-Ace 7800 and SRAM Red will be an attractive option for
people who already own Dura-Ace 7800 components and want to
buy a 2009 bike that can use previous Dura-Ace 7800 across the
board. Going forward in 2009 Shimano’s new version 7900
series Dura-Ace appears to have complex, limited backward compatibility
with 2008 Dura-Ace 7800. This may have been a bad move for Shimano
regardless of how good the new 2009 Dura-Ace 7900 series component
kit is. People may have a tough time de-coding the (in?)compatibility
chart. Shimano has been criticized before for leaving previous
technology owners “stranded” when they introduce
new components not unlike the introduction of a new Microsoft
operating system- to make anything work you have to have the
new stuff: But SRAM Red will work with the old stuff too. Big
advantage for SRAM.
Shimano has published a cross compatibility chart
that suggests more compatibility between 7800 and 7900 (pre-2009
and new 2009 Dura-Ace) than was initially represented by industry
product managers of several major bike manufacturers. The chart
does include at least one mention of compromise performance
though. This asterik leaves the end result in question until
the groups are in widespread use among consumers.
In a very significant way, SRAM is to Shimano
What Apple is to Microsoft. The SRAM user interface is more
adaptable, compatible and versatile and easier to use- although
the later is subject to opinion. The new Shimano high-end component
kit, Dura-Ace 7900, may effectively force them to upgrade to
Shimano’s bicycle version of Vista with questionable backward
compatibility. Additionally, the Shimano development team seems
less connected to consumer desires such as the allure of carbon
fiber (there is very little on the Dura-Ace 7900 compared to
SRAM Red) and ceramic bearings. SRAM Red features this component-candy
out of the box giving consumers what they’ve been upgrading
to over the past two years without the upgrade cost- or at least
charging them for the upgrade up-front.
SRAM also enjoys the advantageous position of
being about last out of the gate with a high end road component
introduction. As a result their offering is the most modern
and relevant to current consumer needs. SRAM Red was introduced
with purpose built aero brake levers for the triathlon cyclist
along with already available bar-end shifters. These items were
not an afterthought. Shimano took fully a decade to introduce
a purpose built aero brake lever.
Over the previous decade SRAM has quietly been
on the acquisition trail buying up companies like Avid, Rockshox,
and Zipp. These technologies come under the SRAM umbrella and
improve their leverage to compete against Shimano and Campagnolo
with a broad range of purpose-built previously aftermarket technologies.
The challenge for SRAM is to integrate these disparate technology
groups into one cohesive bicycle component story where everything
is related, everything works together. If there is one area
where Shimano excels- and there are several- integration of
components is one of them. Shimano invented the integrated shifter/brake
lever and the concept of a component ensemble intended to work
seamlessly together and controlled by rider intuition. SRAM
has taken the learned counsel of Shimano when it comes to integration.
The practical question is can they execute it as well?
Another business advantage for SRAM is lead time
for deliveries to bike companies. Product Managers for bikes
companies- the guys and girls who order the components that
bike manufacturer use during the year- have learned that delivery
times for Shimano components at the original equipment manufacturer
(O.E.M.) level will be long in 2009, upwards of 100+ days for
Shimano component kits to build bikes. SRAM is quoting lead
times shorter than half that time giving them faster access
with bicycle product managers. The result is 2009 bikes with
SRAM components are already on bike shop floors while most bike
shop guys haven’t even seen the 2009 Shimano components.
Shimano hasn’t earned the market share they
have accidentally though, and the new Dura-Ace 7900 is already
discussed among insiders in awestruck tones. It will have to
raise the bar high as the previous 7800 series Dura-Ace was
very good and SRAM Red is even better. The price of Shimano
Dura-Ace 7900 hasn’t just gone up; it has increased nearly
$1000 compared to the previous 7800 components. This firmly
positions the new Shimano 7900 Dura-Ace as the most expensive
high end super component group by over $500 above SRAM Red and
Campagnolo Record Carbon.
On the marketing side it took Shimano years to
win a major professional cycling tour with Lance Armstrong’s
7 consecutive Tours and then Alberto Contador’s eighth
Shimano tour victory. SRAM scored a bit of a coup with a Giro
de Italia win in its first year on the professional cycling
circuit as Contador switched to SRAM components in 2008. Two
teams go into the 2008 Tour de France with full SRAM Red sponsorships,
Saunier Duval and Agritubel- although one is already out on
drug scandal allegations. A Tour de France victory for SRAM
will have to wait since Contador’s Astana team, lead by
the controversial Johan Buyneel, has been banned from the Tour
de France. Ironically the Saunier Duval Team has suffered a
more severe fate by being ejected from the Tour when one of
their star riders and double stage winners produced a positive
drug test. On the positive side there has already been one yellow
jersey using SRAM Red on the back of Agritubel’s Romain
Feillu. For a first year component kit, this is a bloody coup
over Shimano and Campagnolo’s dominance of Le Tour.
Perhaps the one uncertainty for SRAM is whether
consumers will embrace the new Red equipped bikes with the same
reverence they have for Shimano Dura-Ace. Shimano enjoys the
massive significant of brand identity attached to years of loyalty.
Even novice cyclists know Shimano Dura-Ace is regarded as the
highest end component kit. This same level of recognition will
take time for SRAM to earn, but their Tour de France successes
will help quickly. Enough SRAM equipped high end bikes will
have to get into the marketplace and under cyclists to create
a “pull-through” effect. In the mean time SRAM represents
a true “Red Menace” to Shimano with valid upgrades,
features and benefits.
Another interesting phenomenon for 2009 are rumors
surrounding the introduction of certain new bike models from
the industry’s leading aerodynamic bike designer, Cervelo.
A rumored successor to the state-of-the-art Cervelo P3C aerodynamic
bike is said to be in the offing but Cervelo has been officially
mute on the subject. So much anticipation surrounds the bike
that spurious commercials have been produced and posted on YouTube
for the new Cervelo and some shops have even distributed mailings
saying they are taking deposits- on a bike that doesn’t
even officially exist yet. Cervelo President Gerard Vroomen
has been active on internet forums saying the news will come
when the news comes and not before. The excitement that surrounds
the introduction of Cervelo’s new aerodynamic bike- whenever
it happens- will be likely to create pull-through and demand
for the bike at unprecedented levels.
With all this wrangling happening in product development
this year we’re bound to see some real change in bicycle
spec and pricing for 2009. Some years are simply “paint
and decal” years when little seems to change except for
cosmetic treatments. This year some real technical changes are
on the table for consumers to sample.
