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Razer sells every product at a loss

Razer sells every product at a loss

Thu 10 Oct 2013 7:09pm GMT / 3:09pm EDT / 12:09pm PDT
HardwareDesign

CEO Min-Liang Tan jokes that eventually Razer will "grow up and be a proper company"

In an interview with VG247, Razer CEO Min-Liang Tan admitted that every product the company ships is sold at a loss. The statement came up when Tan was asked about the sales of Razer's left-handed gaming mouse, which he said sells "terribly." Tan said his company is focused on gaming, not just ideas that make a profit.

"We're not run like a real company, I know. It's insane, but every single product we ship, we're shipping at a loss. Life is short. And it's funny to see someone using a left-handed mouse," he said. "I have great investors. They're passionate about what they do. I tend to be able to deflect any questions like 'how are we doing on a business level? How profitable are we?' by going 'Look at this! Isn't it cool?' And they go 'Oh yes, it's cool,' and then I agree. Yet another board meeting saved."

"Our investors are genuine product people. I'm thankful for it. I cannot imagine if somebody's just interested in like, a bottom line or a profit," he explained. "We've been able to make decisions that make absolutely no commercial sense whatsoever. Even the laptop flies in the face of industry reports. You know, 'PCs are dying, everyone should get out of the PC industry' and here we are going 'Great! Let's invest as much money as we can in building a PC laptop.' Right? Doesn't make any sense but hey! Look at it! It's cool."

Razer recently released its Razer Blade gaming laptop in Australia, which the company touts as the world's thinnest gaming laptop. The Blade is plenty powerful, but it's also pretty pricey at $1,999 for the cheapest model. Tan said that the Blade is only possible because Razer is willing to spend the money on significant R&D.

"For every finished product that goes to market, there are probably four finished products that we've done but not released," Tan explained. "It's one of those things, a Razer design initiative. We take a million years to get anything out. If you put things in perspective, most other companies probably launch more products in a single year than we have done in the past - since we were founded."

"It's like a running joke. We launch on the average maybe five, or four new products a year? And our customer base complains that we launch the products too fast. I'm trying to figure out why. Most other companies launch about 50 new products a year, or even 100. We launch very few products - but products that everybody wants. if there are 50, you might only want one of them, or three of them, but because we're just so lazer-focused on gamers themselves, every single thing becomes a gamer's requirement."

17 Comments

Morville O'Driscoll Blogger & Critic

1,613 1,476 0.9
I must say, I like the fact that Razer are one of the few companies to aim for specific markets, even at a loss - the MMORPG-oriented and left-handed mice show a willingness to find currently uncatered-for markets. It's just a shame there's so little in the way of profit margins.

Also, odd how I think of Valve whilst reading this... Or maybe not odd, really, especially with the talk of slow product releases. Bets that there's going to be a Steam Machine-certified Razer streaming box? 5'll get yer 10? :D

Posted:A year ago

#1

Pier Castonguay Programmer

189 106 0.6
'PCs are dying, everyone should get out of the PC industry'. Everyone saying this is completely clueless, PC are stronger than ever.

Posted:A year ago

#2

Paul Johnson Managing Director / Lead code monkey, Rubicon Development

925 1,569 1.7

Posted:A year ago

#3

Chris Murphy Community & Live Manager, Ubisoft

46 17 0.4
While I have to admire the "gamer centric" approach that they are portraying, you have to question that claim. Given the fact that other peripheral companies are able to maintain a functioning and profitable business...the notion that none of Razer's products are profitable is quite disturbing. They've been iterating upon a number of their most popular mice for a while now, surely there's not a great deal of R&D costs to cover there. Then of course there are the huge licensing deals that they do with the biggest publishers in the world. And don't forget their mouse mats...

I would have thought that these would be relatively "safe bets" that are at the very least profitable.

Posted:A year ago

#4

Iulian Mocanu Writer, editor, and video editor

5 1 0.2
I am a bit suspicious of this news, mostly because of the Belkin Nostromo, which Razer sold as the Razer Nostromo, at a 50% price hike.

Posted:A year ago

#5

Keldon Alleyne Handheld Developer, Avasopht Ltd

455 443 1.0
Sounds like they should register themselves as a charity or a social enterprise, then they could get some tax breaks and operate at a profit.

Posted:A year ago

#6

Gareth Eckley Commercial Analyst

88 68 0.8
Whilst I'm as big a fan of the PC as anyone:

[link url=""]http://www.gartner.com/newsroom/id/2604616[/link]

Now how much of this is down to the economic slump and how much of this is down to other factors, I could not say without further analysis. People don't build consoles for themselves, for example.

Posted:A year ago

#7

Keldon Alleyne Handheld Developer, Avasopht Ltd

455 443 1.0
@Gareth: that is a direct response to Metro, people hate Windows 8 that bad they've declined to upgrade.

Posted:A year ago

#8

Adam Campbell Associate Producer, Miniclip Ltd

1,200 1,017 0.8
I also think its quite a disturbing claim but its his business I guess.

Posted:A year ago

#9

Tim Senior PR Manager, ROCCAT GmbH

3 1 0.3
PC gaming is stronger than ever

Posted:A year ago

#10

Richard Westmoreland Game Desginer, Exient Ltd

138 90 0.7
Whilst I can admire his dedication and customer focuses, you should not be proud about running a business badly. He has employees' livelihoods in his hands.

Posted:A year ago

#11

Jean-Marc Wellers Assistant Online Services, Ubisoft

17 7 0.4
If employees get paid fine, I see no problem in this.

Posted:A year ago

#12

Jean-Marc Wellers Assistant Online Services, Ubisoft

17 7 0.4
He says that, but on the other hand, I can see other companies like "Astro Gaming" ok, it's only headsets for now, but they also don't have lots of products out there.
Companies who launch 50 products a year, sell at loss for most of them, but make HUUUUUUGE MARGINS on their mainstream products.
Razer is insignificant in terms of marketshare. (PC)
I got myself a pretty Razer Mamba, and I love it!!! It's all I need and ever needed! Perfectly perfect!

Edited 1 times. Last edit by Jean-Marc Wellers on 11th October 2013 4:49pm

Posted:A year ago

#13

Yvonne Neuland Studying Game Development, Full Sail University

32 55 1.7
I absolutely love Razer Products. I use the Razer Naga 2012 gaming mouse, and it all the extra buttons are great for way more than just gaming. I have profiles set up with document editing shortcuts for excel, powerpoint, word, and one note that make formatting so much faster. I also have a profile for Visual Studio set up that cuts out a ridiculous number of keystrokes when coding.

I also use their Black Widow Keyboard for coding, which is loud, but so much easier on the wrists. Love my Razer Nostromo for playing GW2.

I do wonder, however, how they can stay in business if they lose money on all their products. That doesn't sound good. I want them to stay in business! They make such pretty toys!

Posted:A year ago

#14

Tim Carter Designer - Writer - Producer

582 322 0.6
Now, if only we could get "game people" interested in investing in games for the same reason...

You know: to do something meaningful... not just to crank out money like you're selling hot dogs.

Posted:A year ago

#15

Tim Carter Designer - Writer - Producer

582 322 0.6
Now, if only we could get "game people" interested in investing in games for the same reason...

You know: to do something meaningful... not just to crank out money like you're selling hot dogs.

Posted:A year ago

#16
It's funny to read this, as someone who's bought razer peripherals for years. Between 5 different versions of my Lycosa keyboards and countless middle-of-the-road gaming mice from these guys, I finally gave it up as a lost cause and a product line that rarely justifies its price tags.

If you can't make money on mediocre gaming mice for 70 USD or so, then it's got to be corporate mismanagement on a large scale. You can get 10 USD mice on ebay direct from China that to my careful eye have the same build quality as some of your mice.

I guess I'm jaded, but this news is not endearing to me at all--it makes me think either it's a blatant lie or that Razer is the stupidest company ever to grace the gaming peripheral marketplace.

Posted:9 months ago

#17

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