SolarFred is making sense

A post by SolarFred rang true with me.

To the Street, the solar uneducated, a solar panel remains a solar panel. The Street just wants to know how much it costs. It’s always the first question. There will increasingly be the pressure for installers to simply get these consumers that lowest price. The commoditization of solar is upon us, but perhaps not quite set yet.

How can your solar company resist this commoditization pressure? … [truncations mine]

… Think about Diane’s. This was New York City. We could have gone to any fast food place for our burger and fries, but we went to Diane’s. Why did we pay probably double the price for basically a Big Mac– plus 20% tip? …

… Think not only about your technological innovations, but your company’s “experience.” As your new solar products come on line, how will you better serve the solar installers that will be selecting these new innovative PV panels on the consumer’s behalf? Easier installation designs are obvious. Loan programs. Well vetted leads. Good training. What does good training mean? What does any of that mean? Define those things for you. Perhaps, if you create a unique Diane’s-like experience for your customers, whoever they are, you will be less susceptible to the 2010 fast food solar PV meat market to come.

As I’ve also written, the solar business is at a critical juncture.  If it doesn’t play its collective cards right, it will commoditize, and miss out on huge potential value capture in years to come.  If a commodity is something that cannot achieve attractive margins due to undifferentiated substitutes and ample suppply, I hold that nothing is inherently a commodity (even PCs).  The behavior of suppliers commoditize categories (vendors do it to themselves).

As SolarFred rightly states, solar players can act now to ensure margins remain healthy as the market grows.  In effect, he is calling for experiential branding of solar products and services.  But it is awfully tempting to minimize price, if you just brought on new capacity and need cash for next quarter.


1 Response to “SolarFred is making sense”

  1. 1 David Churbuck July 29, 2009 at 1:44 pm

    Commodification fascinates me, so I went back and read your initial post on PCs and the commodity effects in that business. If a PC maker can’t differentiate on the basis of brand and drive a corn-flake’s margin into what is arguably one of the most complex devices in the history of civilization — then what can a solar panel manufacturer do when the customer/installer is looking for a functional result?

    E.g. — I want a solar charging system on my sailboat. I am likely to be greeted with speeds-and-feeds as I research — with a price denominator present at all times.

    In the end, I bet I buy based on customer recommendations — not specs.

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