Allen Bradley Standardization

I think you will find there is not a whole lot of difference in the price of parts when you go and compare apples to apples.

Many people try to compare the price of apples and oranges, and find that they may be radically different and thus consider one or the other to be over priced.

I have not found AB to be perfect, and sometimes their tech support could be better, and occassioanly they are a bit slow at getting warranty parts out, but over all they are pretty good.

There is some company that can do each thing AB does better or for less cost, or both. But, there are few companies that have the wide range of products AB has that play well together.

but dont allow that captive audience attitude blur your future vision... everything can change and will... and that is NOT an AB slight either. if they keep doing their job then good on them.

Excellent point, Bob. Those ads that show Automation Direct stuff at a third the price of AB's can be misleading because they compare the Automation Direct prices against AB's LIST price. But Automation Direct actually sells at those prices, whereas AB uses a more traditional discounted price structure, so the prices ctually paid by an OEM are significantly better, though still higher than Automation Direct's. This is no slight on Automation Direct, I use a lot of their stuff and like it, just that you have to know how to interpret the price comparisons.

I have seen multipliers under 0.20 (not saying from who or for what products). I get a kick out of the people that think they get a great deal from AD or similar places. If they only knew what some people actually pay for name brand parts they might well fall over dead. And often it is just a matter of asking. Discounts are not available for low volume, but sometimes you can get name brand stuff at very competitive prices at fairly moderate volumes.

Unless you do big bucks with AB you don't get much of a discount. Especially in underserved areas. Offsetting that, is the fact that it's far easier to spend a lot of money with AB :^)
Even if you don't buy from them you should be very glad there is at least one vendor who wants to compete on price. And AD pays a lot more attention to my "need it nows". They have always treated me like a king......no, better, like a Customer. And fast is normal for them.

Regards
cww

In some respects it depends on what you consider "big" bucks.

If you buy a few grand a year in parts, you are unlikely to get much of a deal.

Bob Peterson

Yeah, I guess it's like a lotta things in this business, great if you are on the inside and pretty ugly if you aren't. But I think it's perfectly fair to use your multiplier to assess how much they want your business and how loyal you should be. I use their stuff when it's well suited to the job at hand but feel no particular loyalty.

I was just shook down for support which I never recall using and we pay close to list so it would be silly to go much out of my way to specify AB.
I don't have a real quarrel with straight quantity discounts, but stuff like the original writer described is pretty much unethical and I suspect illegal in some venues. It is at best an abuse of the power that unethical lock-in provides.

Vendors who work on a high volume, low markup model with the same price to all will do better in the smell test.

Regards
cww

I don't know why you think extending special discounts to preferred customers is illegal or unethical. It's the way virtually all business is done. Go to any car dealership. You will find the same car can sell for 100 different prices, depending on what organization's discount you use, who you know, or how many cars you agree to buy.

By the way, do you know for a fact that AD does not extend discounts for larger quantities? I have heard some things that make me believe otherwsie.

The main thing about AB and AD is that with AB you know the list price is the highest price you will pay, but it's likely to be somewhat lower (in some cases a lot lower). With AD, at least for most low volume users, the list price is the selling price.

I can't speak for AB in particular, but some companies are simply not interested in dealing with smaller customers or customers that don't fit their defined sales profiles. Their sales policies are simply a polite way of telling you to go away.

If you don't get the impression that someone is anxious to have your business, then take your business elsewhere. If you need a supplier more than they need you, then your business is in a bad position.

Hi Bob

I'm not sure you read what I wrote. Volume discounts do make it tough for small firms to compete, but they do have a reasonable basis. It does cost less to ship in bulk and large users often create less burden per unit as they are beyond the learning curve. But demanding exclusivity with the threat of higher costs is extortion. Encouraging
exclusivity with better discounts works out to be about the same thing but is at least arguably legal as it would be hard for the benefactor to show damage. Competitors
may have a claim, but carrots provoke many fewer complaints than sticks do. But pressuring folks for exclusive use of your products has been held to be
restriction of trade. And yes, it happens all the time, particularly with monopolies and those who would be. A good example is the current case AMD filed against the
other leg of the duopoly, Intel. It's all about abuse of power to eliminate competition. Now, AD may or may not offer quantity discounts. I know at least I can get their stuff at the published price. But the whole point is moot because they simply don't have the power to abuse. Let's look at it another way. If we met on the street and you suggested I give you my wallet. you would perhaps hear a chuckle and it's fairly unlikely there would be an incident. Or I might in good humor demonstrate that it is empty and move along. No crime, no foul. But if you were to do that same thing with a pistol in your hand, it would probably end less amicably and most would agree that a crime had been committed. If you are a small integrator in a market where a large percentage of your prospects demand Buglogics, Buglogics can have considerable power over whether you survive or not. For some reason the power linkage between these scenarios is ignored or discounted because one is how people do business these days. I simply have a hard time discriminating which one. The second case would in fact, do much more damage than taking my wallet :^).

Regards

cww

Any manufacturer that limits their market share by causing problems for their "once-loyal" clients is only thinking of their short term returns. It is easier to manage an account that is not totally adverse to your product than to win a new client over. The cost of doing business with new clients is more than with a client that uses other products at times and then your at other times.

AB has enjoyed the largest installed base of control products in the US for a long time. When this happens, it is very easy for the manufacturer to get complacent and its focus moves from the customer first to the company first. The tactics you mention represent that mode of operation.

I have been on all sides of this issue with many manufacturers such as AB, Siemens and Modicon. If you want to get good pricing and support from a manufacturer regardless of the size of the order or if you use our product intermittently, contact [email protected] or contact me and I will get you the resources you desire at the pricing you need for any thing Xycom represents on the market.

Howard Love
Xycom Automation
(804) 938-4988

Hi Michael

I have to disagree. If the majority of your prospects, for whatever reason, specify a particular vendor, it's quite easy for your to need that vendor a great deal more than they need you. That's not to say that you need to be happy about it or patronize them, but if you need to sell to those prospects, you need their vendor of choice. I do structure my business so that I don't need vendors I don't like, but that's why I work a day job :^). I could easily climb on the monopoly bandwagon if money is all that matters. I sleep better if I work the day job and wait for honest work in my consultancy. Many folks don't have that luxury as they have overhead.

Regards

cww

Right you are, Curt.

A vendor can provide great support to the larger companies and get spec'd in. Then the vendor gives poor support and pricing to all of the smaller companies who have to buy their products only because they are approved by the larger company. The larger companies probably don't even realize that this is happening and how much it actually costs them.

Hi Curt.
You certainly cannot compare AB to the MS/Intel situation. There are a lot of competitiors to AB in all of their market segments, and GE, Siemens and Schneider are all comparable to AB in the range of products they offer, and in some respects may even exceed AB's product range.

Offering a deal on their products if you standardize on their products is not unique to AB. Nor is it immoral, illegal, or unethical as you suggest. Both sides benefit when this type of arrangement is used. The buyer gets products at a lower cost. The seller gets more volume, and it goes to people who's support and marketing cost is very low. Do not underestimate the cost of getting a new customer nor of supporting one. What AB (and others doing similar programs) have done is recognized that these type of arrangements reduce the seller's overhead substantially and they have put that in to the pricing structure.

For custom automation, the situation I am familiar with is where the end customer specifies what they want used in the machine. The "vendor" in this situation is wasting his time doing a sales job on the machine builder, as they just quote the machine with the components they are told to.

The end customer wants specific hardware used because they have to support the machine for the rest of its life and they can only afford to stock a limited variety of spares for their plant. Big factors for them are local stocking of
spares and quick delivery in an emergency.

I've never dealt with a custom machine builder who wasn't willing to put whatever the customer wanted into a machine. A standard off-the-shelf machine is a different story of course, but this is a smaller part of the market.

Given the above, I'm not sure just what the relationship between the "larger" and "smaller" companies is that you are referring to. Larger companies do get better multipliers, but that is true for most large businesses, not just automation. Cost of sales is lower for a customer who buys a lot of any item.

As for "poor support", I think you'll find that in many cases everyone large and small is getting "poor support" these days. Some vendors (especially some of the smaller ones) are still quite good. For many of the larger ones though, the support staff are the first to go when their company needs to make up for a bad investment elsewhere.

Hi Bob. I don't see where the strategies are different, it's just less effective due to the slow and partial turnover related to the life of the products. And the various NIH and nationalistic trends in Europe that ensure that a global monopoly is unlikely. But there are certainly regional and line of work monopolies
and a trend towards less competition here in the USA. There are many "generations" of PCs for each generation of PLCs. That slows the trend.

There are a lot less brands available than in the past, and if another major throws in the towel that could well be a tipping point. If that's due to a clear and obvious superiority of product, fair enough. But if it's due to sweetheart, exclusivity deals and restriction of trade, we all lose. And if it progresses, hang on to your checkbook, you ain't seen nothing yet.

Most of the stuff that eventually leads to antitrust and other regulatory concerns is recognized. Hell, price fixing would be recognized if they could get away with it. Every once in a while when the wrong people get burned, they unrecognize some recognized methods. IBM and ATT used to use recognized
practices to very effectively control the market.

Regards
cww

That all I hear is money, money and money. YES, I can sell it to you cheap. Nothing against automation direct, or any other company that makes plcs. I bought rslogix 500, never used programing software before, within 30 minutes
had a program written. AB software was very user friendly. Then bought AD software, that was 2 years ago, still have not written one line of logic with AD software. Sorry, it not user friendly. I prefer to buy software that I can use, even it cost 5 times more. I don't care who name is on the plc or software. Why should I go through another learn curve to save money? I'm going to lose more money trying figure the unuser friendly stuff out. I support quality, quality, quality.

In North America, Allen-Bradley sells exclusively through independent distributors. THEY set pricing for the end users. A-B can suggest pricing but the distributor has the ultimate say. How one distributor handles a given customer is no reflection on the rest of A-B distribution in the U.S., and is certainly not a refelction of the manufacturer, A-B. A-B currently has the best value for a control platform available for small to medium apps (less than 5,000 I/O points) if you factor in scalability, openess, functionality, local support, etc. Modicon is obviously pulling out, GE is still way behind on the technology and can't make up their mind, Siemens doesn't know what they want to be when they grow up, and the Asians are hurting for anything that resembles local support on American soil. To boot, A-B as a company is more open for price negotiation discusssions than they have ever been.

I agree that, if I couldn't use it, I would think less of DirectSoft. But, I've never seen a programming package that I _couldn't_ use. I have seen a few that I wish I didn't have to use. And a few that make very little sense
(Step 5 comes to mind) and all are a little quirky. Many are still keyboard oriented, which I don't mind at all and few are as completely guified as RSLogix. One project in with most and you're reasonably comfortable. I suppose if you are a big Windows fan, RSLogix is about the best as you can point and click through most of a task. I'm not sure which planet the Step 7 folks are on, it's completely guified but more like a database program than a programming tool. I think that your impression of RSL is because, from the get go, it flows as a programming tool and you don't have to fight with it. The rest, to varying degrees, do little or nothing to point you towards the next step, or any step for that matter. My own opinion is that some of the DOS and DOS heritage packages are better in this respect than most of the Windows packages.

But the skunk on the table here, is that you are usually stuck with the software package kludged, bought or well crafted by the hardware vendor. I'm fairly sure RSL has sold much more hardware than the inverse. And there is a lot of good, useful, hardware that we'll never even hear of because the tools aren't there or totally suck. AD is an example. The Koyo hardware has been good enough for TI, GE, and Siemens and several lesser known others. The software is usable and the pricing is good for both. But if you could program it with RSL or their software was as "friendly" they would sell a lot more. If someone could make a decent software package that worked with several popular brands of PLC, that would be a hot item as well.
But as long as these things are bundled and proprietary, the software will be the dominant reason for going with a PLC line. And the lock-in will keep prices high. There are trends around this, but most shops are highly resistant to change and obtaining commonality most definitely requires change. But cheap isn't just cheap. And while it's fulfilling for some to use it as a dirty word, cheap is another word for pricing reflecting cost and value. I am constantly spending $3000 for a 3 voltage < 100 W power supply that I could buy generically for $100 or $21k for a wheezy old 33 Mhz 68030 computer design used as a console on a printing press. And the quality argument seems a little weak since I _am_ replacing these. Those doing the PanelView shuffle can identify at least a little. I don't mind paying for quality either, but one quickly grows weary of rape and pillage.

Regards

cww

I'll try to remember that when they're shaking me down for support again. "Just send the money, we'll mail you what you bought, and better hurry or it'll just cost you more! All the details will be in the packet". Reminds me of shrinkwrap licenses.

Regards

cww