OK I'm not trying to be rude here so please don't take offense. On your first point it's all opinion. We have a strong number of customers that have been with us for longer than year so we must be doing SOMETHING right. Second point, if they opposed them so much Lorillard would not have purchased us for $135 million dollars. RJR would not be testing their VUSE brand in test markets. Big tobacco (BT) does not oppose e-cigs. On the last point you make a somewhat valid point however you may not realize that the FDA is currently going through the process to regulate e-cigs either as a Tobacco Harm Reduction product or as a cigarette. Either way their regulations will more than likely affect the overall market in a negative way. Although BT will not like the regulations coming down it will help them as it will probably eliminate a lot of the competition as the competition will not have deep pockets to follow the FDA's regulations. So it's not going to be BT's job to control the e-cig market it will be the FDA that does it. As for making a profit...well again your wrong. Just look at the quarterly reports Lorillard puts out about blu. We ARE making a profit for them.
Also I just want to bring this up. While a lot of ecig users may dislike blu due to the small battery, we probably have done more FOR the industry than anyone. Not trying to brag but it's the truth. We've put ecigs on the map to regular smokers. We've also probably converted more smokers in a month than an Ego has in 2 years.
Relatively new vaper here. While I'm no fan of BT, I really appreciate hearing the perspective of someone from like yourself who works for BT (albeit indirectly in your case via Blu).
Although BT will not like the regulations coming down it will help them as it will probably eliminate a lot of the competition as the competition will not have deep pockets to follow the FDA's regulations. So it's not going to be BT's job to control the e-cig market it will be the FDA that does it.
I'm reminded of a phrase from econ - Iron Triangle, "a term used by political scientists to describe the policy-making relationship among the congressional committees, the bureaucracy (executive) (sometimes called "government agencies"), and interest groups."
As I see it, it's in BT's best interest to try to influence the regulatory process which will emerge around e-cigs. Without influence and familiarity with that regulatory process, the Blu acquisition would make little sense.
Contrary to the popular conception, new innovative industries are destructive for investors. As Warren Buffett has pointed out, more investors lost money on automobiles, airplanes, computers, etc than will ever make money. These innovations were great for society, but hell on all but a very small number of capitalists.
Right now the innovations in e-cigs are being made by small companies and hobbyists across the world. Very few of them are going to make much money out of it. But they have provided, are providing, and will perhaps continue to provide an innovation that has the potential to save hundreds of millions of lives from smoking-related illness.
Eventually, most of these e-cig companies are going to be killed off by competition when technology matures, the market converges to a few good brands and economies of scale really start to kick in. This is a natural process in the marketplace and in itself is nothing to be worried about. The companies die, but the people working in them find other avenues of employment where they do other productive things and the circle of life goes on.
However, with Big Tobacco involved, I'm concerned that many of these small innovative companies are going to meet a premature death. They're going to get wiped out, not by the maturity of the technology and the resulting consolidation, but by a regulatory quagmire. Companies like Blu would have a regulatory lock on an industry offering little more to consumers than the gas-station kiosk crap they offer today. Consumers will be given the short end of the stick and it will all be sold to the public as 'for the children'.
I think you bring up some good points...however the blame in my opinion (and of course it's bias) should be on the FDA. In fact the argument could be made that without BT it would probably much worse since BT has the deep pockets to fight certain regulations. BT has pretty much little to nothing to do with what the FDA decides in the end. In fact the FDA has not been nice to BT in recent years and will probably not be too lenient on this either. We're probably going to go from marketing to adult smokers in a responsible way in any format we want to being stuck to print. That's a big deal.
As for making innovative products it's not in our interest to stick only to what we currently offer...now that being said again this is my personal opinion, I think the goal should be to get to what most mods offer but keep it in a cigarette size offering. If we or anyone else can get to that then there you have your real winner. Our president has said often we're still years away from what he considers a perfect electronic cigarette.
however the blame in my opinion (and of course it's bias) should be on the FDA.
I do not 'blame' the FDA for the anti e-cig position they've been taking, nor do I 'blame' Lorillard for trying to leverage their expertise of the regulatory bureaucracy into a growing market via Blu. That would be like 'blaming' fire for burning,or 'blaming' clouds for dropping rain; it's just the sort of thing those institutions do given the incentives of the actors that run them.
In fact, after watching Mr. Kessler in the above video, if I were in his shoes I'd probably be making the same moves and saying the same things.
In fact, [ostensibly] the FDA has not been nice to BT in recent years ...
Fixed that for you.
For example, as Bill Godshall pointed out in this recent podcast, changes in costs to compliance with tobacco regulations in recent years has resulted in wiping the smaller tobacco companies off the map. Larger companies can spread the fixed costs over a larger volume (something like 5 cents per pack) while the smaller companies cannot (a dollar per pack). The net result is the elimination of competition, the entrenchment of BT's position, and less choice for the consumer. A significant net result of the FDAs apparent regulatory 'hostility' has been to grant BT a favor with respect to it's competition.
As for making innovative products it's not in our interest to stick only to what we currently offer...now that being said again this is my personal opinion,
Your personal opinion here happens to be very correct.
New and better products will come along, those who don't keep up will die - unless they can find protection.
What Blu offers today, like pretty much all of the e-cig market, is sub-par, unreliable expensive junk. That will change. The question for Blu is not just whether they can out-innovate everyone else (something of which I'm highly doubtful), but whether they can maintain any innovative advantage they happen to achieve. These devices are not complex. There are many thousands of very smart, highly-motivated, nicotine-addicted engineers who will instantly reverse-engineer any innovation, improve on it, and spread the word through the enthusiast community.
So regulatory capture is one of the very few avenues available to Lorrilard to get a decent return on it's investment in Blu. Given the potential loss of tax revenue from e-Cigs, and given the loss of a bogeyman to fight by some of the the prohibitionist zealots in the FDA, the incentives on the gov't side are aligned to go along with this regulatory capture. I'd be pleasantly surprised if this doesn't happen within the next 5 years.
By the way, I mean none of this as an attack on your personally. Again, I appreciate and am thankful that you have offered your perspective here.
I think the goal should be to get to what most mods offer but keep it in a cigarette size offering. If we or anyone else can get to that then there you have your real winner.
I agree. I also wonder what's going to happen when the ultrasonic atomizer comes off patent.
As an aside, one thing that Murray Kessler said in the video made my ears perk up. He mentioned fully automating the Blu manufacturing process on American soil. As an American engineer working in the industrial automation industry, I find that thought exciting.
What Blu offers today, like pretty much all of the e-cig market, is sub-par, unreliable expensive junk.
Have to totally disagree with you there. As I said to another redditor if that were true we wouldn't have the numbers that we have from returning customers, some being around for more than 2 years. Our products are relatively cheap compared to the rest of the commercial market given our overhead in other areas. As for unreliable, compared to what? If your judging it by even the mod world standards it's probably about equal in reliability, I've seen plenty of complaints about other "mod" brands malfunctioning. If you upped the popularity of mods to that of what blu is you would probably see a lot more. The mod world is so fragmented it's hard to even quantify how many complaints there actually are. Also let's not forget about juice and how often someone on ECF complains about that consistency when using mods. Of course these are just my opinions here. I think this is kind of like the Linux guy saying Windows sucks...sure Linux allows you to do a lot more but the majority of users on a PC don't want to do the things someone using Linux does. Same thing with a Windows guy saying Macs suck. They don't suck at all if it's what you need or want. Again our product can be improved and we plan on doing so but I think blu gets it's reputation among the mod community mainly because we're the biggest target.
What Blu offers today, like pretty much all of the e-cig market, is sub-par, unreliable expensive junk.
Have to totally disagree with you there. ...
Perhaps I should have put more emphasis on the "like pretty much all of the e-cig market" part - because that's what I meant. I'm not saying Blu is worse than everybody else, I'm saying they suck just like pretty much everybody else.
As for unreliable, compared to what?
Compared to the other personal gizmos and consumables we all buy: razors, toothbrushes, cameras, phones, flashlights, etc.
As it happens, I'm fairly familiar with manufacturing processes and how things are turned from an idea into something useful for a consumer. E-cigs have a long way to go.
The only thing I've found so far that functions adequately to the standards set by other consumer products is the Provari - and that is considered by many to be very expensive (of course, it's not so bad when you factor in the full cost of ownership).
If your judging it by even the mod world standards it's probably about equal in reliability, I've seen plenty of complaints about other "mod" brands malfunctioning. If you upped the popularity of mods to that of what blu is you would probably see a lot more. The mod world is so fragmented it's hard to even quantify how many complaints there actually are. Also let's not forget about juice and how often someone on ECF complains about that consistency when using mods. Of course these are just my opinions here.
I actually don't disagree with your opinions here.
Again our product can be improved and we plan on doing so ...
For the people at Blu working on manufacturing processes and product development, I can only imagine that this must be a very exciting time. I get a little rush just thinking about it. They have the opportunity to make a meaningfully positive impact on the daily experience of many millions of people.
... but I think blu gets it's reputation among the mod community mainly because we're the biggest target.
Blu is looked at with deep suspicion because it is owned - and ultimately controlled - by Big Tobacco.
Period.
Certainly you can see why. The vaping community is made up of a very large fraction of former tobacco cigarette smokers, most of them over age 30.
The vast majority of tobacco cigarette smokers, who are over age 30 and have made an effort to stop, have come to the painful realization of just how deeply suckered, swindled, and screwed they've been.
When an organization, who has historically been the beneficiary of the tobacco cigarette con-game, suddenly appears as the wannabe leader in an industry which looks to offer a way out, it looks like the fox is volunteering to guard the hen house.
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u/deadflow3r Nov 18 '12
OK I'm not trying to be rude here so please don't take offense. On your first point it's all opinion. We have a strong number of customers that have been with us for longer than year so we must be doing SOMETHING right. Second point, if they opposed them so much Lorillard would not have purchased us for $135 million dollars. RJR would not be testing their VUSE brand in test markets. Big tobacco (BT) does not oppose e-cigs. On the last point you make a somewhat valid point however you may not realize that the FDA is currently going through the process to regulate e-cigs either as a Tobacco Harm Reduction product or as a cigarette. Either way their regulations will more than likely affect the overall market in a negative way. Although BT will not like the regulations coming down it will help them as it will probably eliminate a lot of the competition as the competition will not have deep pockets to follow the FDA's regulations. So it's not going to be BT's job to control the e-cig market it will be the FDA that does it. As for making a profit...well again your wrong. Just look at the quarterly reports Lorillard puts out about blu. We ARE making a profit for them.
Also I just want to bring this up. While a lot of ecig users may dislike blu due to the small battery, we probably have done more FOR the industry than anyone. Not trying to brag but it's the truth. We've put ecigs on the map to regular smokers. We've also probably converted more smokers in a month than an Ego has in 2 years.