Attach rate

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The attach rate is a concept used broadly in business, especially in marketing, to represent the number of units of a secondary product/service sold as a direct or implied consequence of the sale of a primary product/service. It is often expressed as a sales ratio of primary to secondary units, or as secondary units sold as a percent of primary. The secondary good/service may be an integral component of the primary purchase (e.g., Bluetooth circuits/capabilities sold within electronic devices) or it may require a further consumer decision (e.g., as in video games sold per unit of the primary console sold). For the latter, the association between the primary and secondary may be general and loose (e.g., DVD-Video discs purchased per primary DVD player sold), or may be the result of product-specific designs (e.g., as with console-specific video games, or sales of phone-specific accessories per unit of a particular mobile phone sold).

Business organization involved in commercial, industrial, or professional activity

Business is the activity of making one's living or making money by producing or buying and selling products. Simply put, it is "any activity or enterprise entered into for profit. It does not mean it is a company, a corporation, partnership, or have any such formal organization, but it can range from a street peddler to General Motors."

Marketing is the study and management of exchange relationships. Marketing is the business process of creating relationships with and satisfying customers. With its focus on the customer, marketing is one of the premier components of business management.

Bluetooth is a wireless technology standard for exchanging data between fixed and mobile devices over short distances using short-wavelength UHF radio waves in the industrial, scientific and medical radio bands, from 2.400 to 2.485 GHz, and building personal area networks (PANs). It was originally conceived as a wireless alternative to RS-232 data cables.

Contents

The attach rate concept is widely used as a means of reporting desirable sales associations/outcomes in the computer/video gaming industry, and in technology-related marketing in general. While complexities of real situations can obscure interpretation, attach rates often provide a metric for marketers of both primary and secondary products, allowing them to assess and even forecast the impact of the popularity of a given technology platform. Rapid sales of primary products create the market for the secondary product; conversely, the sale of platform-specific secondary products provides an indication of longer term demand for the primary platform. Real interpretive complications in technology include the general rapid evolution of both primary and secondary products, as well as factors such as changes to attach rates over a product's life cycle (e.g., because of the unrepresentative behavior of early adopters). Attach rates for products are also used more broadly in marketing, and strategically, attach rates can factor into the decision of a primary product manufacturer to merge with or acquire a secondary product manufacturer, and in the valuation of businesses in such times of times of mergers and acquisitions.

An early adopter or lighthouse customer is an early customer of a given company, product, or technology. The term originates from Everett M. Rogers' Diffusion of Innovations (1962).

Mergers and acquisitions transactions in which the ownership of companies, other business organizations or their operating units are transferred or combined

Mergers and acquisitions (M&A) are transactions in which the ownership of companies, other business organizations, or their operating units are transferred or consolidated with other entities. As an aspect of strategic management, M&A can allow enterprises to grow or downsize, and change the nature of their business or competitive position.

Definition and analysis

The attach rate is a concept used broadly in business, especially in marketing, to represent the number of units of a secondary product or service sold as a direct or implied consequence of the sale of a primary product or service. [1] It is often expressed as a sales ratio of primary to secondary units, or as secondary units sold as a percent of primary. [2] [ better source needed ]

The good or service may rely upon a secondary consumer decision (e.g., as in console-specific video games purchased per primary console sale), or be an integral component of the primary purchase (e.g., Bluetooth circuits/capabilities shipped within primary electronic devices sold). For those requiring secondary decisions, the association between the primary and secondary may be general (e.g., the loose association between sale of one or more brands of DVD-Video discs purchased per primary DVD player sale), or may be the result of product-specific designs (e.g., the foregoing video gameconsole tight association, similarly with phone-specific accessories for particular mobile phones).

Video game electronic game that involves interaction with a user interface to generate visual feedback on a video device such as a TV screen or computer monitor

A video game is an electronic game that involves interaction with a user interface to generate visual feedback on a two- or three-dimensional video display device such as a TV screen, virtual reality headset or computer monitor. Since the 1980s, video games have become an increasingly important part of the entertainment industry, and whether they are also a form of art is a matter of dispute.

A video game console is a computer device that outputs a video signal or visual image to display a video game that one or more people can play.

DVD-Video consumer video format used to store digital video on DVD discs

DVD-Video is a consumer video format used to store digital video on DVD discs. DVD-Video was the dominant consumer home video format in Asia, North America, Europe, and Australia in the 2000s until it was supplanted by the high-definition Blu-ray Disc. Discs using the DVD-Video specification require a DVD drive and an MPEG-2 decoder. Commercial DVD movies are encoded using a combination MPEG-2 compressed video and audio of varying formats. Typically, the data rate for DVD movies ranges from 3 Mbit/s to 9.5 Mbit/s, and the bit rate is usually adaptive. DVD-Video was first available in Japan on November 1, 1996.

The attach rate concept is widely used as a means of reporting desirable sales associations/outcomes in the gaming industry, though it is common in many technology-related marketing discussions. For instance, in an example related to computer or game console software, a situation may occur wherein:[ citation needed ]

In this example, Platform A has a much higher attach rate (5 titles sold per hardware unit sold, or 5:1), versus Platform B (1 title sold per hardware unit sold, or 1:1) Hence, while in absolute terms, Platform B is outselling Platform A (by a factor of 10:1), the much higher attach rate of Platform A (5:1, vs. 1:1) has business implications. In particular, software publishers may view Platform A as the more attractive, depending on the rate of sales of each platform, because that platform only needs to sell an additional 1,000 units for their title sales to match the sales related to Platform B.[ citation needed ]

Interpretations

Marketing

While complexities of real situations can obscure interpretation, attach rates can provide a measure for marketers of both primary and secondary products, allowing them to assess and even forecast the impact of the popularity of a given product (e.g., of a given gaming or other technology platform). Rapid sales of primary products such as game consoles, personal computers, and cell phones create the market for a host of secondary products. Conversely, in cases where the secondary product purchase requires a further customer decision—i.e., ignoring integral examples like the Bluetooth case—the sale of platform-specific secondary products provides an indication of longer term demand for that primary platform, or related versions of that platform, to continue to support the secondary product.

Real circumstances in technology and other business sectors complicate interpretation of attach rates. These complications include the rapid evolution of both primary and secondary products (e.g., the evolution of gaming platforms away from being single use devices, and of games from having only a single means of distribution). As well, factors such as changes in attach rates early in life cycle (when behavior of early adopters of technology is unrepresentative of the overall market) and late (when consumer behavior may have changed with regard to how they use the primary product) also make interpretation and forecasting of attach rates difficult.

Strategic

Attach rates for products can factor into the decision of a primary product manufacturer to merge with or acquire a secondary product manufacturer, and can impact the valuation of businesses in such times of times of mergers and acquisitions.[ citation needed ]

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References

  1. Anon., 2015, "Glossary: Attach Rate," at AfterDawn (online), see , accessed 14 April 2015.
  2. 1 2 Hui Pan, Ed., 2009, "High Speed Access Report 1Q 2009," p. 7, B&C Consulting and IGI Consulting, Boston, MA: Information Gatekeepers Inc., see , accessed 14 April 2105.
  3. Paul Polishuk and Sean Buckley, Eds., 1999, "Information Superhighways and E-Commerce Newsletter," Vol. 6, No. 10, October, 1999, p. 14, Boston, MA: Information Gatekeepers Inc., see , accessed 14 April 2105.