That only works if the new player stays on the fringe and doesn't appear to be a threat. But as soon as he does, history shows that the Alpha male, in this case Estes, will crush threats quickly. The only way startups can withstand this is to have, as you astutely surmise, a competitive advantage - IOW, Semroc develops a manaufacturing breakthrough of some sort.

If they actually can do that, then making and successfully selling mainstream motors in the traditional commercial channels is possible.

Assuming there is no breakthrough, then product differentiation is the key.

I work for a company that 2nd sources lots of IC's. We come to market with many chips after the competition is well established. But we can do it with our low cost production model - we can carve out market share by selling on price.

OTOH, when we bring sole sourced products, we can charge a lot more and pay off our NRE much faster, thus getting to profitibility much faster.

My take is that the devoted rocket modelers may be a small chunk of market, but they all have their checkbooks out ready to buy bulk packs of B14's. That's quick ROI which can then be used to fund an assault on the mainstream.


Doug