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Business Week article re: Shimano's "Coasting concept"

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Old 09-21-07, 06:15 PM
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Business Week article re: Shimano's "Coasting concept"

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https://www.businessweek.com/magazine...8/b4050078.htm

Here's the full text:
----------------------------------------------------
Return Of The Easy Rider
With U.S. cycling in decline, bike parts giant Shimano steered the industry in a new direction

This summer, cyclists in skintight shorts raced through the French countryside in the annual Tour de France. The winner, Alberto Contador, rode to victory on a Trek Madone 6.9 Pro that would cost consumers $8,249.99. Alice Wilkes also bought a Trek bike this summer, but she had a very different experience. Wilkes bought a Trek Lime, which shifts automatically so riders don't have to fuss with gears, stops when cyclists pedal backwards (like in the old days), and has a big, comfy seat. It retails for $589.99.

With her new bike, the first one she has owned in 40 years, Wilkes hits the trails near her Lynchburg (Va.) home. For Wilkes, it's not about speed and performance. "Tight cycling clothes—that's not my world," says the 55-year-old grandmother. "I like to feel free, with the wind flying up my sleeves."

The new "Coasting" bikes are a daring attempt by the bike industry to get some of the 161 million Americans who don't ride back in the saddle. Bike sales in the U.S. have been flat for nearly a decade, hovering between $5.5 billion and $5.9 billion since 1999, according to the National Sporting Goods Assn. Worse, the number of people riding bikes is falling. According to the sporting goods group, 35.6 million Americans over 7 rode a bike at least six times last year, down from 43.1 million in 2005 and 53.3 million in 1996. "We lost a lot more cyclists than we thought," says David Lawrence, senior manager for product development and marketing at Shimano America Corp., the Japanese bike component manufacturer behind the Coasting gambit. "It wasn't sustainable."

The bike industry was blinded by a blip in sales of high-margin, top-end road bikes after Lance Armstrong's remarkable string of seven Tour de France victories. Sales of those expensive, high-tech marvels of modern engineering stabilized revenues, even as unit sales slid.

And that was Shimano's motivation to come up with the Coasting concept and sell the idea to bike makers such as Trek and Giant. For Shimano, Coasting is not just another new product. The company is the Microsoft (MSFT ) of the bike industry. Manufacturers install Shimano's components—gears, derailleurs, crank arms, and the like—on the vast majority of bikes produced. As the bike business goes, so goes Shimano.

To refine the new biking concept, Shimano turned to Palo Alto-based innovation/design consultancy IDEO, which co-hosted a one-day workshop with BusinessWeek this past summer. David Webster, who runs IDEO's San Francisco office, understood that for people such as Wilkes, building a better bike wasn't enough. Shimano needed to build a better biking experience. "We're interested in sitting, not [just] the chair," Webster says. So rather than starting with computer models of great-looking bikes, IDEO sent researchers into the homes of people who don't ride. They met with boomers in Atlanta, Chicago, Phoenix, and San Francisco to talk about leisure activities.

In the process, Shimano learned why people stopped riding. It wasn't so much that they were out of shape, or too busy or lazy. It was because cycling had become intimidating, something for hard-core athletes who love all the technical minutiae. "Everything had changed in bicycling," says Shimano's Lawrence. "It had gone from fun to being a sport, and no one had noticed."

For boomers, bikes changed from the 10-speed rides on steel frame bikes to 30-speed carbon fiber and titanium machines. Costs rose from a few hundred dollars to thousands. Handlebars, pedals, tires, even seats came in so many varieties that consumers got overwhelmed. And bike shops, filled with workers who fawned over gear, had little time for customers interested in just plain bikes. Yet there was hope for Shimano. "Everyone we talked to, as soon as we talked about bikes, a smile came to their face," Webster says. And that nostalgia gave Shimano an opening.

With IDEO, Shimano developed a concept for a new bike that had a familiar look and was easy and fun to ride. In fact, riders of Coasting bikes never have to shift gears. To keep things simple, the bike uses Shimano's automatic shifting technology. There's a tiny computer on the seat post or tucked under the bottom bracket that triggers a gear change when riders hit 7 mph, and again at 11 mph. The processor is powered by the rotation of the front wheel. In addition to the back-pedaling Coasting brakes, some bikes come with puncture-resistant tires and a chain guard to keep the grease off cyclists' pants.

Research also showed that people worried about safety riding their bikes, especially about getting sideswiped by a car. This led Shimano to move into an advocacy role to increase the number of bike paths around the country. It built a Web site, coasting.com, where riders could find safe routes in their communities.

And Shimano also moved to improve the shopping experience. Shimano put bike industry executives who have direct contact with bike-shop staff through empathy training. To understand how uncomfortable many customers feel in bikes stores, the male managers were sent to buy cosmetics at Sephora. In addition, every Coasting bike dealer was sent a DVD explaining how customers for Coasting bikes are folks who "just want to ride."

Not everything worked as planned. Research showed that the ideal price for the target market was $300 to $400. "It turns out that was too aggressive," Webster says. The cost of the auto-shifting mechanism pushed the price for even the lowest-cost bikes to $450.

It's unusual for a parts supplier to push its corporate customers to expand their brands into a totally new market. Initially, Shimano didn't wow bikemakers with its Coasting pitch. The first prototype Shimano showed was unlike anything on the market, with rounded chrome hubs on the wheels, a swoopy curved frame, and handlebars with loops in them big enough to set a coffee cup inside. The cushy seat flipped up to reveal a mini-trunk to store a cell phone. "It was kind of like Audi meets Dr. Seuss," says Kyle Casteel, product manager at Raleigh America Inc. in Kent, Wash. "Shimano thought this was the next big thing, and we were like, Is it?'" Casteel recalls.

Executives at Trek, the world's largest bikemaker and builder of Armstrong's rides, were also nonplussed. "To be honest, it was anticlimactic," says Chad Price, Trek's pavement bike product manager. But Price was looking to introduce nonriders to Trek's bikes, and he saw how the Coasting concept could help.

Trek, Raleigh, and Giant did, finally, embrace the Coasting concept, if not all the features of the prototype. Since the spring, when Shimano rolled out a 15-city marketing campaign, the three manufacturers sold out of the roughly 30,000 Coasting bikes produced. They're making more as Shimano moves into other markets in the fall. It plans a media bash in New York's Central Park in mid-September.

In the end, bike riding is always about the experience. Lance Armstrong has his. Now Alice Wilkes has hers.
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Old 09-21-07, 07:03 PM
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Very interesting. I totally agree with the 'intimidation by LBS' notion. I know a fair bit about bikes, and I still prefer to shop online because of the crap attitude I get at the LBS.
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Old 09-21-07, 07:41 PM
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Originally Posted by Gordiep
Very interesting. I totally agree with the 'intimidation by LBS' notion. I know a fair bit about bikes, and I still prefer to shop online because of the crap attitude I get at the LBS.
Same here. Gave a friend of mine an old Raleigh Sport and he went to an lbs to inquire about a pump. He told me the sales guy seemed 'somewhat annoyed' and just 'didn't want to deal' with his questions. I've personally dealt w/this aggravatingly condescending attitude a number of times until I made the decision to shop online for most of my needs. I only go to an lbs as a last resort. If I run into a sticky problem I can post here to the mechanic's thread and I've got a real good friend who's a great bike mechanic just a phone call away.

Love this article. It's about time major players got involved in utility/commuter bikes. Isn't it funny how the selected designs are all so similar to the Raleigh 3 speeds?
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Old 09-21-07, 07:44 PM
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Anything that puts more people on bikes is a good thing! I just don't understand why they couldn't put a regular 3-speed on the bikes, that would have made them cheaper, and accessible to even more people. I don't really believe that a 3-speed would be any more difficult than an automatic.
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Old 09-21-07, 07:47 PM
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Research also showed that people worried about safety riding their bikes, especially about getting sideswiped by a car. This led Shimano to move into an advocacy role to increase the number of bike paths around the country.
Was anyone else sad to read this remark??

I was prepped to read: "This led Shimano to.....add sideview reflectors....(or)....add an advanced lighting system.....(or).....fund education programs".
But instead Shimano's solution is to get those damn cyclists off the street for the streets are the cars domain; silly cyclists.
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Old 09-21-07, 10:04 PM
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dwoloz, I think that shimano considers the problem to be people's perception of cycling as unsafe rather than the lack of actual cycling safety.

I think bike lanes give cyclists a perception of safety.

I think they also provide a safety advantage relative to riding along the gutter or on the sidewalk, which is what many newbie cyclists are inclined to do.
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Old 09-21-07, 10:32 PM
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Not sure they're talking about bike lanes. The article mentions "bike paths," which suggests MUPs to me. I do agree with cerewa that Shimano is dealing with perceptions -- as I see it, that's the whole point of the campaign. I think it's a good thing... anything to remove psychological obstacles to getting on a bike is a step in the right direction.
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Old 09-21-07, 11:13 PM
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sweet, I think anything getting more cyclists is AWESOME...
and i like these coasters too...
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Old 09-22-07, 12:15 AM
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I think I'll try one if my LBS carries it. I just don't like the coaster brake set up. ' would be nice if they offer it with regular hand operated brake as an option.
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Old 09-22-07, 06:50 AM
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Originally Posted by dwoloz
But instead Shimano's solution is to get those damn cyclists off the street for the streets are the cars domain; silly cyclists.
The recreational cyclist wants to go out and have a good time. Ride around, get a little exercise. Not worry about whether they should be taking the lane or who has the right of way.
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Old 09-22-07, 07:04 AM
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Originally Posted by dobber
The recreational cyclist wants to go out and have a good time. Ride around, get a little exercise. Not worry about whether they should be taking the lane or who has the right of way.
Xactly. While some of us schelps might consider dancing with traffic as recreation, we are in the wacky minority.
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Old 09-22-07, 07:51 AM
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Originally Posted by Gordiep
Very interesting. I totally agree with the 'intimidation by LBS' notion. I know a fair bit about bikes, and I still prefer to shop online because of the crap attitude I get at the LBS.

I guess I'm lucky. There are at least 2 LBS's in my area that aren't all about the techie stuff. To them, it's about riding. Folks at both shops ride, the closer one is a family-owned shop that's been around for more than 50 years. Both shops are helpful and focus on having fun riding. Don't get me wrong, both shops have some extremely serious riders in their clubs and, at least the closer one, the owner is a big rider too.
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Old 09-22-07, 07:55 AM
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I think the problem is not that bike shop owners and workers aren't "all about riding", it's that they are enthusiastic about a types of riding that appeal to too few people (such as levels of road or MTB racing that require more than 15 hours/week on the bike to attain)
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Old 09-22-07, 08:22 AM
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Originally Posted by dwoloz
Was anyone else sad to read this remark??

I was prepped to read: "This led Shimano to.....add sideview reflectors....(or)....add an advanced lighting system.....(or).....fund education programs".
But instead Shimano's solution is to get those damn cyclists off the street for the streets are the cars domain; silly cyclists.
They should have put a review view mirror on the bike if they were really concerned. Or give anyone buying this bike a Take A Look mirror.
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Old 09-22-07, 08:35 AM
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From the article:

>>>Not everything worked as planned. Research showed that the ideal price for the target market was $300 to $400. "It turns out that was too aggressive," Webster says. The cost of the auto-shifting mechanism pushed the price for even the lowest-cost bikes to $450.<<<

If the Trek Lime was to make ANY impact in the market, the bike would have to sell for $89.00 dollars. The fact they considered $300 - $400 dollars, "Aggressive" is insane! I have yet to see any Trek Lime's on the streets because it's overpriced.

I don't know why Trek gets interviews in major magazine when it's the department store bikes that have a much greater impact when it comes to introducing bikes to the low end consumer. There will be 1000 more Next department store bike sold for each Trek Lime.

What I would like is an article asking Pacific bikes why they are building such a crapy bike. Maybe if we put the spotlight on them, they might change their ways and sell reliable 3 speeds hub bikes or light single speed coasters for $99.00 dollars. This would be far more productive then spending time interviewing Trek on how they are going to impact the market with an overpriced $500.00 dollar beach crusier.
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Old 09-22-07, 09:05 AM
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Originally Posted by Dahon.Steve
From the article:

>>>Not everything worked as planned. Research showed that the ideal price for the target market was $300 to $400. "It turns out that was too aggressive," Webster says. The cost of the auto-shifting mechanism pushed the price for even the lowest-cost bikes to $450.<<<

If the Trek Lime was to make ANY impact in the market, the bike would have to sell for $89.00 dollars. The fact they considered $300 - $400 dollars, "Aggressive" is insane! I have yet to see any Trek Lime's on the streets because it's overpriced.

I don't know why Trek gets interviews in major magazine when it's the department store bikes that have a much greater impact when it comes to introducing bikes to the low end consumer. There will be 1000 more Next department store bike sold for each Trek Lime.

What I would like is an article asking Pacific bikes why they are building such a crapy bike. Maybe if we put the spotlight on them, they might change their ways and sell reliable 3 speeds hub bikes or light single speed coasters for $99.00 dollars. This would be far more productive then spending time interviewing Trek on how they are going to impact the market with an overpriced $500.00 dollar beach crusier.
Profit margins...also why there are multiple grades of Schwinns. You can get a basic 3 speed cruiser from Wallymart for $119, single speed fat tire is around $90. The 3 speed is sans fenders the single speed has them, both are aluminum frames. I haven't ridden one but the components and the finish quality scare me. One I looked at had hair line cracks in one of the welds. Everybody likes to hold up the Raleigh Sports as the poster child of 3 speeds and for good reason. But they forget about inflation and the lack of the dollars unfavorable position in the world market at the moment, as well as the fact that it was not an inexpensive bicycle it's day. A 1970's Raleigh Sport in today's market would sell for around $300. I believe there are a few quality bikes hitting close to that today. The KHS Green appears to be one. Breezer Freedom is another but the prices seemed to have jumped a bit for 2008.

I also think that as people's perceptions of cycling change and fuel prices continue to escalate we will see a resurgence of the more comfortable bike become available. As far as pricing...who knows. Some raw materials have doubled in the past year, stainless being one of the ones that I am most familiar with, as well as increased energy costs associated with manufacturing and transportation.

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Old 09-22-07, 09:47 AM
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I want to get a Lime for my mom. She's got really, really bad allergies right now though and can't go outside without coughing her brains out, so it might not happen for awhile. I was telling her about the bike and how she doesn't have to shift and how she could put a basket on the front to carry her little dog around in it and she loved the idea. She asked how much it costs and I said, "Well, it's unfortunately kind of expensive. It's like $600." And she said, "That's not bad at all! I would spend that much."
I think, like the article said, that people who are totally detached from the biking world have this perception of bikes being incredibly expensive and intimidating. It seems like what they're doing is working, and I think it's great. Eventually, the cost will go down, but for now they seem to be piquing the interest of the market that they were shooting for.
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Old 09-22-07, 10:42 AM
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Look at the Raleigh, too. IMO, it's a much prettier bike and it seems sturdier to me than the Trek.
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Old 09-22-07, 12:35 PM
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Automatic Shifting? Really?

I love that more folks might be biking, but I'm surprised that automatic shifting is worth the extra cost for these newbies. I mean internal hubs are pretty darn simple to use.

I hope it's a "that's neat" factor rather than yet another sign that we're becoming the "Dumbest Place on Earth" (tm) ...
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Old 09-22-07, 12:40 PM
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Um, there are plenty of older people out there who got overwhelmed and stopped riding when single speed adult sized bikes became less available for purchase. There are also people with health issues such that taking hands off the handlebars for anything is dicey. I think this bike could be good for them.
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Old 09-22-07, 01:33 PM
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Originally Posted by chipcom
Xactly. While some of us schelps might consider dancing with traffic as recreation, we are in the wacky minority.
Yes, that's sadly cycling in America: one's only choice is to either play tag with the skaters and dog walkers on the MUP or kamakazi in heavy traffic. If only we had millions of miles of quiet neighborhood streets....

Actually, the industry learned in the 1930s that the building of a local "bike" trail caused an uptick in local bike sales. It doesn't matter to the industry if the path is actually a good place to ride any more than it matters to industry if a Costing bike is actually a good bike for the customers - never mind the steak, it's the sizzle that sells. Coasting buzz will get non-riders in an LBS in ways that a KHS Green or Breezeer Freedom never could; a new multi-million dollar path will do the same in ways a $300 cross light switch won't either.

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Old 09-22-07, 01:37 PM
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I think this is the fifth time I've read this rewrite of Shimano's press kit in various magazines.

+1 on anything that get more folks out having a joyous time on a bike. Still, the Coasting bikes are for folks that can ballance, steer, pedal and brake but not shift a three speed hub - and who is that?

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Old 09-22-07, 03:23 PM
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Originally Posted by tcs
Still, the Coasting bikes are for folks that can ballance, steer, pedal and brake but not shift a three speed hub - and who is that?
Maybe, a guy or lady who buys Porsche, but without a stick.

Last edited by Barabaika; 09-22-07 at 04:58 PM.
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Old 09-22-07, 03:29 PM
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Originally Posted by cerewa
I think the problem is not that bike shop owners and workers aren't "all about riding", it's that they are enthusiastic about a types of riding that appeal to too few people (such as levels of road or MTB racing that require more than 15 hours/week on the bike to attain)
Yeah, this is somewhat the case at the LBS nearest to me. They cater to mostly hardcore road riders (they stock a $6000 Independent Fab bike w/ full Campy Carbon Record, fer crissakes...). What's funny is that in all of their print ads, they tout their commitment to "all types of riders." Rriiight. I ride a SS with fenders, etc...last time I was there, an employee made a 'when you get a real bike' crack. I'm never going back.
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Old 09-22-07, 05:23 PM
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Bikes: Trek XO1 (Commuter), Trek Madone 6.5, older Trek 850 hardtail MTB, crashed Kestrel 200SCi I can't toss

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Originally Posted by Gordiep
Yeah, this is somewhat the case at the LBS nearest to me. They cater to mostly hardcore road riders (they stock a $6000 Independent Fab bike w/ full Campy Carbon Record, fer crissakes...). What's funny is that in all of their print ads, they tout their commitment to "all types of riders." Rriiight. I ride a SS with fenders, etc...last time I was there, an employee made a 'when you get a real bike' crack. I'm never going back.
When I picked up my new Trek XO1 on Thursday (replacing crashed road bike I'd been using as a commuter), the store owner who had planned to do a nice 50 mile ride today, was working on a small, pink girl's bike. It's a LBS that will help anyone, from the guy who just bought a new 2008 Trek Madone 6.9 Pro fit to the family that just wants something a step above a Walmart bike.
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