Monster Cable lowers prices during recession

For years, electronics shops loved Monster Cable's high-priced, premium cables. Consumers snapped them up for $100 and more when purchasing expensive new flat-panel TV sets and home audio equipment.

Then the recession hit. TV sales stalled. Monster lost one of its top retailers — Circuit City, which closed 567 stores.

Now, founder and "Head Monster" Noel Lee is cutting prices on top-of-the-line cables for high-definition TVs, effective in June. An 8-foot HDMI cable that currently sells for $129.95 at Best Buy will be priced at $99.

"We're lowering prices, due to the recession, but we're also increasing performance," says Lee.

On Monday, the company also lopped $10 off the price of its most basic — but rarely stocked — HDMI TV cable, to $29 for a 1-meter length. And it introduced two new lower-cost HDMI cables in 2-meter and 4-meter lengths for $39.95 and $59.95. Competitors' cables of similar length can be found online for as low as $5.

Privately held Monster does not release sales figures, but tech analysts believe it's hugely profitable — even though some argue that pricey cables don't make most home entertainment centers sound or look better in the digital era.

"If you're a broadcast TV station, and need four times the bandwidth of most people, then yes, you need a higher-performance cable," says Wilson Rothman, an editor with gadget blog Gizmodo. "But to get the signal from your Blu-ray player to a TV 2 feet away — that's not a challenge. The cheaper cables do the job just fine."

Lee's main selling point is that a high-performance cable will prepare you for new technologies, while a $5 to $10 cable from the company's Asian competitors will not.

"Do you need the higher-performance cable today? Probably not. But with bigger displays and 3-D TVs coming down the pike, you will, eventually," Lee says.

Such talk riles bloggers like Joshua Topolsky, editor-in-chief of tech blog Engadget. "You buy a new cable with the new TV — not three years ahead of time," he says.

Origins in analog

Lee started the company in the analog era in 1979, on the premise that higher-grade cables would enhance the audio experience, and critics and retailers agreed. Lee moved effortlessly into the digital world with cables for high-def TVs, and prices increased dramatically with the new technology.

A recent visit to a Los Angeles Best Buy showed Monster HDMI cables (used to connect a TV set to a cable or satellite set-top box) on display for $89.95 to $169.95.

Lee says that while he offers lower-cost cables, retailers don't want to stock them, and that his customers prefer high-end "performance" cables.

"It's ironic," Lee says. "When people buy Monster, they don't expect to pay (a) low price, so our lower-end cables don't sell very well."

Rich profits for retailers

For retailers, cables and other accessories have higher profit margins than big-ticket TVs.

"Cables are enjoying percentages consumers would scream about if they knew the markup on them," says Richard Doherty, an independent analyst at Envisioneering Group.

Ed Kasza, a salesman for Chicago area retailer The Little Guys, says his store uses only Monster cable because it is the most reliable cable. "Would you really want to put a $25 cable with a $3,000 TV?" he says.

"You'd be wasting your money on the TV if you were to do that."

Page
  • 1
  • |
  • 2
Join the Discussion
You are using an outdated version of Internet Explorer. Please click here to upgrade your browser in order to comment.
blog comments powered by Disqus
 
You Might Also Like...
See It, Share It
PHOTO: The fake baby a man was carrying as he and another woman tried to sneak into the mother and baby unit at Mercy Medical Center in Merced, Calif., hospital officials said.
Dignity Health Security/Mercy Medical Center Merced
PHOTO:
dpa, Jens Wolf/AP Photo
PHOTO: U.S. Customs and Border Protection officers at the George Bush Intercontinental Airport in Houston stopped a would be smuggler from bringing nearly 7 ounces of cocaine into the country in tamales, Aug. 22, 2014.
U.S. Customs and Border Protection
PHOTO: Giant panda Bao Bao celebrates her first birthday at the Smithsonians National Zoo, Aug. 23, 2014.
David Galen, Smithsonians National Zoo