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Razer ships every product at a loss, laughs all the way to the bank

Thursday, 10th October 2013 08:09 GMT By Brenna Hillier

Razer boss Min-Liang Tan admits he does’t run Razer “like a real company”; the PC and peripherals manufacturer ships every product at a loss, for example. Speaking to VG247, the CEO shows off his sense of humour and commitment to gaming, not profits.

Razer Blade

Measures 345mm x 186.8 mm x 235 mm – “Super portable, super light,” says Tan.

Innards on par with a good desktop’s; the Intel Core i7-4702HQ Quad Core processor is standard voltage, not a watered-down mobile jobbie like the Ultrabook’s.

Also boasts 8GB of DDR3L (1600 MHz), a GeForce GTX 765M with 2 GB GDDR5, and an Intel HD4600.

Specs make it suitable for next-gen games; it can run Watch Dogs, for example.

Available with 128, 256, and 512GB SSDs.

Display is a 14″ 1600×900 with LED backlight.

Whenever I have to talk to a CEO I get quite nervous. I write about video games for a living, for heaven’s sake. The press junkets I attend are considered swanky if the majority of attendees are wearing shoes. I can’t talk to chief executives. What if I accidentally say a swear word? What if burp? What if the nerves go to my head and I dash a glass of water in their face before screaming and leaping out of a window? It gives me the willies.

Min-Liang Tan, though, is terrific fun. He doesn’t look anywhere near old enough to be telling anybody what to do; he wears t-shirts; and he cracks jokes. During out chat, he even went off the record to call out a game he didn’t enjoy, and had to be kept firmly under the eyeball of a PR minder in case he spillt forth all Valve’s secrets in a gush of enthusiasm for a project that clearly excites him.

“One day we’ll grow up and be a proper company,” he said at one point, referring to Razer’s tendency to put “awesome” before “profitable”, but I kind of hope he’s wrong.

Tan was in town to promote the Australian launch of its improbably sexy gaming laptop, the Razer Blade. Nobody is impressed by tiny, light laptops anymore, of course; but then again, nobody’s ever made one like the Blade before. Razer is marketing it as the world’s thinnest gaming laptop, but I feel like that’s a mistake. As gamers, we hear “thin” and “light” and we think “rubbish”. Razer should instead call it “world’s fanciest gaming laptop, oh, and incidentally it is thinner than a five cent piece” (a fact Tan demonstrates for me with a coin from his own pocket) because its specs are eye-openingly ambitious.

I called the Blade improbably sexy, but when Razer began negotiations with PC manufacturers its ambitions were described as not just improbably but flat out impossible, eventually leading the peripherals manufacturer to bring the design process entirely in-house, even building robots to test its prototypes as it challenged some of the most difficult quandaries in tech engineering.

“We’ve always viewed ourselves as a gaming company – not like a peripherals company per se. About five years ago I was looking for a gaming laptop myself, and I realised I had two choices. I could either go for the super thin, super light, really nice laptops that have a super low voltage CPU, good enough for Angry Birds or something like that, or I could go for the big, thick and heavy gaming laptops,” Tan said.

“We went and talked to the manufacturers and said can you build us something powerful and light at the same time? And they said no, it’s impossible. So we kept knocking on doors. They kept telling us it was impossible. We said okay, what the hell. We’re gonna bring in designers and engineers that can help us with this.”

Razer lucked out, Tan said, because the tech engineering industry was going through a bit of a crunch, and PC manufacturers were outsourcing their design to cheaper markets in China and Taiwan, branding existing products. It created a “huge glut of all the top system engineers in the world”, whom Razer promptly hired.

“This is something that is half the thickness, half the weight of anything comparable out there. To be even able to get it 10% thiner is a feat by itself. But we have here is probably two or three generations ahead, because we decided to really push through with design,” Tan said.

It’s clear that Tan is proud of the device, and as he runs through its features with me it’s also obvious that an immense amount of thought has gone into it. From the one-third sized power supply brick to the way the lid opens at a feather touch and shuts with a satisfying little snap, it’s a spectacularly attractive bit of tech that inspires massive geek lust in me and belies its powerful guts. It has as much or more smex as Apple products – and a price tag to match – but it’s also a suitable stand-in for the hulking great desktop thrumming away in my gaming den at home.

Making a device this delicious is something only Razer could do, because only Razer is willing to go through the incredible amount of prototyping and attendant R&D cost required to produce one product this ambitious.

“For every finished product that goes to market, there are probably four finished products that we’ve done but not released,” Tan said.

“It’s one of those things, a Razer design initiative. We take a million years to get anything out. If you put things in perspective, most other companies probably launch more products in a single year than we have done in the past – since we were founded.

“It’s like a running joke. We launch on the average maybe five, or four new products a year? And our customer base complains that we launch the products too fast. I’m trying to figure out why. Most other companies launch about 50 new products a year, or even 100. We launch very few products – but products that everybody wants. if there are 50, you might only want one of them, or three of them, but because we’re just so lazer-focused on gamers themselves, every single thing becomes a gamer’s requirement.”

Tan paused. “Unless you’re a left-handed mouse.”

There’s a reason why companies don’t produce left-handed mice (Tan assures me the plural is indeed mice), and it’s because they make no money. They make even less money when they’re designed for such a specific purpose as gaming. Razer made one anyway, because fans asked for it. I asked how it was performing.

“Terribly,” Tan said candidly, before breaking into laughter. “Commercially, it’s one of the worst decision we’ve ever made. But it’s one of those things where it’s just funny; we do it. Every product we do that we lose money on is still funny for us.

“We’re not run like a real company, I know. It’s insane, but every single product we ship, we’re shipping at a loss. But, eh! Life is short. And it’s funny to see someone using a left-handed mouse.

“I have great investors. They’re passionate about what they do. I tend to be able to deflect any questions like ‘how are we doing on a business level? How profitable are we?’ by going ‘Look at this! Isn’t it cool?’ And they go ‘Oh yes, it’s cool,’ and then I agree. Yet another board meeting saved.

“Our investors are genuine product people. I’m thankful for it. I cannot imagine if somebody’s just interested in like, a bottom line or a profit. We’ve been able to make decisions that make absolutely no commercial sense whatsoever. Even the laptop flies in the face of industry reports. You know, ‘PCs are dying, everyone should get out of the PC industry’ and here we are going ‘Great! Let’s invest as much money as we can in building a PC laptop.’ Right? Doesn’t make any sense but hey! Look at it! It’s cool.”

As noted in the comments below, “shipped at a loss” does not mean unprofitable. Following publication, Razer reached out to reiterate that it doesn’t design products with profits in mind – but it’s certainly not making a loss on every product.

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24 Comments

  1. Game Hunter

    This Is indeed sexy and a powerhorse.I love to get one for university works and next gen games.

    #1 12 months ago
  2. Llewelyn_MT

    People often forget that design and manufacturing is not only supposed to make money, it should make the world a better place. Kudos for Razer.

    #2 12 months ago
  3. Max Payne

    This was very fun article , but that means they are always in ”debts ” ?

    #3 12 months ago
  4. dizzygear

    These guys make sexy products indeed. I own 2 razer mice them and both are great. They certainly can endure more abuse than Logitech’s G series.

    #4 12 months ago
  5. foofly

    Damm, that laptop is expensive.

    #5 12 months ago
  6. FabioPal

    “They kept telling us it was impossible. We said okay, what the hell. We’re gonna bring in designers and engineers that can help us with this”

    Probably one of the best quotes from a CEO ever!

    #6 12 months ago
  7. Dendroball

    Well it’s pretty difficult to believe his words when he says that they ship all of their products at a loss, this gaming laptop aside, all of their gaming peripherals are pretty much expensive, some would even say overpriced.

    #7 12 months ago
  8. Erthazus

    RAzer Blade is a beast.

    #8 12 months ago
  9. nollie4545

    Of course they are making money. Razer gear is some of the most top notch kit around, it is pricey but it is very very good.

    #9 12 months ago
  10. primey0

    @nollie4545

    I hope that’s a joke.

    #10 12 months ago
  11. newbond

    I use the Left-Handed Death Adder mouse at work next to my Black Widow Stealth Edition mechanical keyboard. Both are lovely, tastefully designed products that perform well. They genuinely enhance my work environment.

    I’m so thankful someone makes a quality, ergonomic left-handed mouse! From what I understand, Tan is left handed, which is why this device was made.
    After reading his thoughts in this interview, I’m only more encouraged to support his company for making what they love ahead of what will maximize profits.

    #11 12 months ago
  12. nollie4545

    Makes a loss on every product, do you honestly believe that? No business will survive unless they can make a margin, either that or the owner/shareholders are all playboy billionaires who enjoy losing money for fun.

    #12 12 months ago
  13. Jinkazam

    I might shed a tear here, maybe they should start kickstarting there products too..

    @primey0 I don’t see any jokes here.

    Of course they make money, this is just some well written, heartbreaking article / interview telling you how razer products are awesome and not so expensive.

    Razer stuff is very good indeed, the company is surely awesome but please cut the BS about the nonprofit part…cheers

    #13 12 months ago
  14. colage

    So, when they’re laughing all the way to the bank, they’re going to extend their line of credit?

    Either Tan is full of it or he’s the worst CEO ever. At what point is Razer going to become a “proper” company? They’re 15 years old. If they’re selling every product at a loss at this point, they either need to raise prices or fold up the company.

    I’d be very, very nervous if I were an investor in this company and my CEO said (more or less) that my money was being used to finance game accessory purchases for other people. I’m glad that they have a consumer focus, but let’s not act like business exists to help people out. Business exists to help investors out – if they put out a quality product inexpensively, all the much better, but nobody is going to willingly invest in a company that doesn’t see a problem with being unprofitable and apparently has no plans to change that.

    Brenna, why not follow up with the investors and see if they’re okay with this strategy? This isn’t a schoolyard where a 7th grader is talking about how much sex he has with his out-of-state girlfriend that you’ve ever met that you can just roll your eyes at and ignore – this is a business submitting to a piece of business journalism.

    #14 12 months ago
  15. UuBuU

    I believe him when he says they arent making a profit on the left handed mice ~ but I dont believe for one minute that theyre making a loss on EVERY product, or even most products.

    Also ~ when is the Razer Blade coming to UK?

    #15 12 months ago
  16. fearmonkey

    I absolutely love Razer products, have been using them for years.

    #16 12 months ago
  17. archaven

    If anyone believe Razer is not making money and making a loss on every product shipped, he probably is no smarter than a peanut LOL. How on earth would a company continue making loss by shipping products that couldn’t sell? LOL.

    #17 12 months ago
  18. Pytox

    Isnt Razer also made at foxconn heh?
    @17 I only think they are talking about the Blade laptop. On other products I imagine they make lots of money

    #18 12 months ago
  19. DSB

    Great article Brenna.

    Yeah, I don’t see how they could be shipping everything at a loss. They’d need some stupid investors. That’s really a pretty ballsy thing to say in an interview. “We’re screwing them, but they like to see our shiny objects, so we figure that’s cool”.

    Could be that he’s getting misunderstood, and he actually means that they spend so much on development that they aren’t breaking even for a good while. I don’t know of any investor who doesn’t want to see a very specific return within a very specific timeframe.

    “Making a device this delicious is something only Razer could do, because only Razer is willing to go through the incredible amount of prototyping and attendant R&D cost required to produce one product this ambitious.”

    I’d really make damn sure to have some documentation for a claim like that, otherwise you’re just advertising their stuff :P

    #19 12 months ago
  20. Brenna Hillier

    “Shipping at a loss” does NOT mean “not making a profit”. It means the price Razer sets on each individual product is not high enough to recoup the cost of development with the initial shipment. The PS3 and Wii U were shipped at a loss for a long time, and both Sony and Nintendo were profitable nevertheless.

    #20 12 months ago
  21. DSB

    @20 Gotcha. Of course that’s what it means.

    Consoles often actually “sell” at a loss though, which means they’re either not making any money or actually losing money on every unit. Obviously they recoup that in online costs and licensing fees.

    I don’t know if everybody does it, but Sony and Nintendo were doing it for a while. The only way to change that is to get better deals on the hardware down the road.

    #21 12 months ago
  22. noamlol2

    see the review

    the laptop isn’t as powerful as a thick Asus laptop (which is half the price btw)

    selling at a loss? i don’t buy that bullshit
    razer products contain the cheapest metirals you can get

    last less then a year, and over-hyped as fuck

    don’t believe the bullshit.

    #22 12 months ago
  23. ChunkyLover112

    Haha. This company is run by a bunch of nerds that can’t do business. Just die already.

    #23 12 months ago
  24. DonnaCabel11

    Jake. I agree that Theresa`s article is great… on saturday I bought a brand new Mercedes-Benz S-class from having made $9863 this month and just over ten/k last munth. it’s by-far my favourite work I’ve had. I started this 8-months ago and pretty much immediately was bringin in at least $74.. per-hr. use this link Exit35com

    #24 12 months ago

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