Around six months ago, I published a series called Taxonomy in which I tried to map out the competitive landscape for FPs and identify which brands were offering users the most value for money. Some things have changed in the meantime and today, we’ll update the list and have a look at who is doing what in the market.Read More
I don't want to focus on this topic any more than you want to read about it, but I think I’ve made a mistake and it needs to be discussed. The last time I spoke about Esterbrook, I thought they were trying to be a contender in the FP market and was totally dismissive about their approach. I could not see any possible strategy that would lead them to success and was critical of the guy behind it – Rob Rosenberg – for even trying. Lately, I’ve been having second thoughts about that and the recent Taxonomy series gives us a framework for helping to see things in the same way that I do.
The thing that stuck with me was Rosenberg – and his father’s – experience in the industry. They weren’t inexperienced outsiders; they had experience with brands like Parker and Waterman and founded a distributor, Kenro. My impulse was to dismiss this experience, to say maybe the father (who sadly passed some years ago) had the nous and the son was trying his best but lacked that skill.
Later, I was struck by a comment of Rosenberg’s that I saw repeated on Facebook or FPN (I apologise for not being able to provide a link) where he claimed not to be aiming for the online pen community, not the enthusiasts and lovers of FPs. I interpreted this as a snide, petty dismissal of a community that had already dismissed Rosenberg – but it stuck with me.
Finally, I was thinking about how foolish it was for someone like Rosenberg to try and imitate the least competitive firms in the market, firms like Cross and Parker, who had the reputation and history to dominate the market in spite of their low-value products. Even if his pens were slightly cheaper, they were still terrible quality, and you’re never going to win over the enthusiasts by being slightly better than awful.
Then it struck me: this is the Esterbrook strategy. He was being genuine when he said that the business wasn’t intended to appeal to the enthusiast community, he was going after exactly the same segment of buyers that buy modern Parkers: people who give these pens as gifts to students and relatives, people who don’t know much about FPs or use them personally, and make the purchase decision on reputation alone. Resurrecting the Esterbrook brand was never about the old products or love for the brand itself; it was because Rosenberg understands that these brands compete on history and reputation. And the unregistered Esterbrook brand was an opportunity for him to quickly gain access to a long history, to produce pens under a storied, respectable name and sell to consumers who don’t really know (or care) about the products that they are buying.
It is actually a pretty smart strategy and I have to give Rosenberg some credit for that. I can totally see why he saw it as a valuable opportunity. Now, some of my readers are smart people: they work at FP manufacturers, distributors, and retailers. Maybe you guys picked up on this right away and are a bit disappointed by my naivete. That is totally fair and I have to admit that I didn’t see this immediately, I wrote my post on Esterbrook long before I connected the dots here, and I was completely wrong. We were never the targets for the Esterbrook strategy at all, and Rosenberg isn’t the idiot I assumed for thinking we would want to buy those terrible, terrible pens.
So the strategy is to resurrect the brand, play on the history and innovation, get the product into the brick and mortar stores – the department stores, the newsagents, wherever pens are sold by people who don’t try before buying – and sell to the buyers who want a respectable, premium gift for someone they don’t see terribly often. The question is: will it work?
The first part of this question means thinking about whether that segment of the market can sustain another business. Right now, it’s dominated by Cross, Parker, Sheaffer, and Waterman (to some extent), and Diplomat and Monteverde play a small role. That’s a lot of brands, and Esterbrook would have to offer something special to stand out. Certainly the brand name has more history and cachet than either of the last two, but it doesn’t have the reputation, recognition, distribution, or production capacity of the big four. But those things can be built up.
My opinion is that the market is already crowded and for Esterbrook to succeed, it would have to steal market share from the other brands and that would probably lead to one of the smaller guys being pushed out of the market – and being careful that Esterbrook itself isn’t the one that gets pushed out. That is a hard thing to pull off but it’s theoretically possible.
The second part of the question is whether Esterbrook – whether Rosenberg – could actually pull it off, and I’m much more negative about this.
First, the relaunch has been a disaster and building the reputation is probably turning out to be something that is much more difficult than expected. Although the brand definitely has a history, I’m not sure that it can be said to have a reputation – I doubt many consumers will recognise the name of a pen company that folded around 40 years ago. Everything depends on the ability of Rosenberg to transform Esterbrook’s history into reputation, and I can see little evidence of that happening so far.
Second, I think there’s a real question of whether you need the support of the enthusiast community to build a brand that sells primarily into the B&M stores. Obviously Rosenberg feels he can tell us to go straight to hell – and maybe that’s true. But it seems like it might’ve been a smarter idea to work with the community and have them evangelise for you – providing some much-needed feedback on product design, and early revenue to sustain the business while growing the distribution network. But my feeling is that Rosenberg is arrogant; he seems to believe that he knows best and working with the community is a waste of time. So be it. I’m obviously negative on Rosenberg’s ability to make this transformation (especially when the online environment is so incredibly hostile) but I’m not going to say failure is a foregone conclusion.
I’ve already been wrong on Esterbrook once and maybe I’ll be wrong again, but I don’t see this working out for them. Sure, the business is actually more competitive than I originally thought; there is definitely a business case here and I would say a reasonable chance such a strategy could lead to a multimillion-dollar payday. But while I can respect the strategy, I don’t see Rosenberg as having the ability or temperament to pull it off: he’s a bully who threatens people and lets his emotions get in the way of good decision-making. It’s hard to imagine someone with that kind of disposition convincing the market that his brand, virtually unknown beyond the enthusiast community, is worthy of their trust and respect. I guess we’ll soon find out if I’ve been wrong again.
In case you’re new to the blog, recently we’ve had a series looking at the competitiveness of brands in the FP market. The first post introduced the idea of competition and innovation, and each post has looked at a different category. Today is the final post, where we explore the least competitive brands in the market.
Before we begin, I really want to emphasise that a lack of competitiveness does not mean that these companies are necessarily the losers in the market or have the smallest market share. In fact, it includes some of the most dominant brands (Parker, Sheaffer, and Waterman) and this makes it an important category to understand. It demonstrates that you can be uncompetitive – you can release products where the value proposition is quite poor, often at a considerable markup – yet remain profitable. There’s a reason these brands mostly only offer cartridge/converter pens.
Those of you with some basic microeconomics under your belt might wonder how this is possible: shouldn’t customers prefer products that provide them with a lot of value and move away from other brands? Well, yes and no. To my mind, this is a reputational effect: brands with a long history of excellence and innovation have earned respect in the minds of many consumers, a reputation that might be totally unrelated to their current product offering. This can sustain a business long after they stop being good value for money. And, though it saddens me to say so, sometimes this can be the optimal strategy for a manufacturer. For any company that owns a FP brand in decline, there are only two options: a big investment in R&D or a slow decline in quality and sales. Many companies faced this choice in the 1990s and early 2000s; Montblanc made the choice to invest and it has paid off very nicely for them. Other brands, which we’ll discuss below, are in managed decline.
Cross doesn’t fit the idea of managed decline as neatly as some other brands, but I nonetheless see the company as one almost universally shunned by educated users. While they are a big US manufacturer and even supply US presidents*, their entire range are stock-standard cartridge-converters with fairly standard designs and a poor value proposition. Their top-of-the-line model, the Townsend (gold nib, $320), is really not that different from a Parker Sonnet (steel ??, gold ??), itself a pretty bland offering. That they only offer two nib sizes (fine and medium) and erroneously claim gold nibs naturally adjust to your writing style, I’m fairly certain Cross aren’t experts in fountain pens and aren’t selling to people who are.
*I suspect part of this is the need to be seen using American brands. It is rumoured that Barack Obama is a Montblanc/Visconti enthusiast so, say what you will about his politics, but the man’s got excellent pen taste.
I’ve already discussed Esterbrook in some detail and will have more to say in Friday's post. Needless to say, they’re not exactly the most innovative or competitive brand that’s around today and – barring some major changes – I still don’t expect them to be with us much longer.
Parker are probably the most beloved vintage brand around and when you look at a 51 or a Vacumatic, it’s easy to see why. These pens were revolutionary in their day, innovative technology aggressively priced, and remain beautiful and functional today. They are undeniably one of the most consequential brands in FP history.
But when you look at their modern range, do you see beauty? Innovation? Revolution? I certainly don’t. I see a range of pens that are decent – but not great – quality that provide little value relative to everything else in the market. The IM ($64), Urban ($79), and Sonnet ($140) are basically the same, steel-nibbed, cartridge/converter pen at different prices and the gold-nibbed pens ($250 and up) don’t offer a whole lot more. When you’re that much more expensive than a Lamy 2000 (gold nib, $160) or a Pilot Vanishing Point (gold nib, $140), you really need to offer customers a little something more than Parker do. At the very least, you need to offer something more than just fine and medium nibs. Even the historical throwbacks – the modern Duofolds and Vacumatics – are fairly lacklustre.
Parker might still be one of the biggest-selling brands in the market but it’s been a long time since they were aggressively competitive. My feeling is that their FP customer base is going to drift further and further away from people who know anything about these products, and eventually dry up completely. It’ll be a sad day when Parker quit the FP business, but unless they start to engage in some serious innovation and competition, it is also an inevitable one.
Despite all of this, I do have to give the overall company some credit for their willingness to invest and develop the Parker 5th Generation technology. It hasn’t exactly grabbed the FP market (or any others) but they certainly deserve respect for putting some serious money into R&D for a new product.
Not unlike Parker (or Waterman, as we’ll see), Sheaffer has a range of metal-bodied, steel-nibbed cartridge-converter pens that barely differ from each other: the 100 ($45), Sagaris ($65), 300 ($80), and Intensity ($90). Apart from some vague design differences, these seem to be exactly the same product. Sheaffer’s flagship pen is the Legacy ($400) which has a dramatically different design and a nice inlaid, gold nib but the same tired C/C filling system. The 2013 release of the Taranis ($145) created some excitement about a possible new direction for Sheaffer, but that direction doesn't seem to have led them anywhere different.
My feeling is that Sheaffer pens have some appeal to new users (particularly those who are more comfortable with brands that they already know and trust), hence the proliferation of cheaper models. The Taranis and Legacy are, in my opinion, deeply unimpressive and really don’t compete with the quality of other products in the market. While many users have good things to say about Sheaffer nibs (gold and steel), it’s not really enough to set their pens apart and certainly not worth the premium compared to other brands. The only real innovation in recent history for Sheaffer has been the design of the Prelude (released in 2012 and soon withdrawn) and the Taranis, but even these have been different relative to the Sheaffer range rather than something radically different to the FP market. While certainly an iconic brand, it’s hard to believe that Sheaffer is currently in a state of anything but managed decline.
That being said, Sheaffer was sold last year to Cross. The price was said to be around US$15mn (which shows there’s still money to be made from a brand in decline) and it will be interesting to see if Cross invest in R&D and try to revive the brand, or treat it like the rest of Cross’ pen business. While I’d very much like to see the former, my (obviously cynical) expectation is the latter.
Finally, to a brand that really surprised me in my research – and not in a good way. It turns out that Waterman’s distribution is much more limited than I expected. While our French correspondent, /u/martinsimonnet, reports that the brand is huge in his country and widely available there, in the US they are not carried at all by Goulet Pens, JetPens, or Pen Chalet, and Anderson Pens carry a single model. In the UK, the Writing Desk doesn’t carry any Waterman pens and Cult Pens has a single, out-of-stock model. The only major retailers I could find with a range of pens was La Couronne du Comte (in the Netherlands) and Fountain Pen Hospital (US). (If any of my industry readers can shed light on this, I'd be interested to know why!)
The second surprise was the size of the Waterman range, especially in the intermediate tier: the Hemisphere ($100), Expert ($130), Expert Deluxe ($140), and Perspective ($150) are all basically the same, steel-bodied, C/C pen. The approach is basically the same as Parker, and that’s perhaps not a surprise given they are both owned by Newell Rubbermaid (along with rOtring, as it happens). Waterman also have a few upmarket models, including the Carene ($220), Exception ($350-600), and Edson ($800), each with gold nibs and a broader range of nib sizes (including, unexpectedly, an oblique range for the Edson) but these are still C/C pens with nice enough designs but nothing particularly exciting. Overall, this is a big range for a brand with limited distribution; I'll be watching with curiosity to see whether the number of retailers increases or the range is reduced in the future.
The third surprise was that the Edson filling system I had heard about – one suitable for flying and comparable to the Visconti double reservoir – seems to be gone. Their $800 pen is now just another cartridge/converter pen, possibly the most expensive production model to include it.
What is not surprising at all was that Waterman is in the same position as Parker and Sheaffer, an iconic brand from the past that is now in a state of managed decline. Their steel nibbed pens offer very little value for money and I can’t see much in the gold-nibbed models that would convince me that they are better value than the many excellent in the same price range. I suspect a lot of consumers may feel the same way and this might suggest the decline in distribution is because many retailers don't want to tie up capital in a brand that can't compete and doesn't sell.
So this concludes the Taxonomy series; I hope that you’ve found it to be an interesting framework for thinking about the role of innovation in FP competition. Some of the brands and topics mentioned throughout the series will be discussed in more detail in later posts.
If there are any particular topics that you would like to see discussed here, please leave a comment or get in touch. Some reader ideas have already become posts (or parts of posts) and I’m always eager to learn what you are interested in. Thanks for reading!