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Friday
Aug152014

Bikes or Insurance, is it the same thing?

Someone recently asked me: “You were a frame builder, so you didn’t actually make complete bicycles?”

I explained that I built frames that either had the ‘dave moulton’ name on them, or Fuso, or Recherché. And when these frames were later built up into a bicycle, the assembled item became a ‘dave moulton, Fuso or Recherché bicycle.

I further explained that the bike business is not like the auto or motorcycle industry, where a company manufactures all the parts, and then assembles them into a car or motorcycle. When it comes to high end bicycles the components are either Shimano, Campagnolo, or Sram. And even the lower priced bikes are mostly built up with the lower priced Shimano groups.

Even the big three American companies, Trek, Cannondale and Specialized design and produce a frame with their company name on it, and that’s it. All three companies’ bikes are then built up with Shimano, Campagnolo, or Sram and the end consumer gets to decide which he/she wants.

Notice I said the Big Three “Produce” a frame, they don’t actually make it. That is done in a factory in China or Taiwan, and it is possible that some of these different brands are made in the same factory. Frame design is pretty standard these days, same angles, tube lengths, fork rake, etc. No one is going out on a limb to make anything too radical.

So all three are basically selling the same item, each is no better, no worse than the other. This is why there is so much spent on marketing, the cost of which gets added to the cost of the bicycle, and passed on down to the end consumer. In most cases the consumer gladly pays this price because the marketing has convinced him that it should cost this much for the very best bike.

It occurred to me that this business model is not far removed from that of the large auto insurance companies. The Big Three bike companies assemble a bicycle with a frame that costs about the same as their competitors’ frame, with the same components that also have a fixed cost.

The Insurance companies assemble a package of insurance services that boil down to the same repairs carried out by independent body shops all over the US. The reason we see so much advertising on TV for auto insurance is because these companies are all going after the same consumer.

The one who spends the most on marketing, convinces the consumer that their insurance is the best, when if the truth be known, each is probably no better, no worse than the rest.

Part of bike marketing is supporting a professional bike team, which is a tremendous cost, Specialized does not support a team, but is an equipment supplier only. Cannondale has had to cave in and is to give up their team, and will stay in the sport as equipment supplier for Garmin Sharp.

This just leaves Trek with a fully sponsored factory team. So it will be interesting to see if they will continue to support a complete team. And if so, will their product cost more, and will it be perceived as better?

 

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Reader Comments (8)

Not sure I agree. I don't ride a carbon frame (Ti and steel frames for me) but where the difference seems to be is not in frame angles but in the design of the tubes - width, shape, thicknesses, etc. It seems there's more variation now than when most racing bikes you could get were either Reynolds 531 or Columbus SL with Cinelli lugs crown and BB. That doesn't mean there wasn't variation in quality depending on the builder, but most bikes were visually distinguishable only by the decals and paint job - kind of like the insurance ads. These carbon frames have many visual differences - say, between a Colnago and a BMC. Food for thought...
Love the blog, Dave!

August 15, 2014 | Unregistered CommenterEd

Interesting analogy Dave. I always have to explain to the uninitiated that in cycling (unlike motor cycling or motor racing) the winners are all riding the same level/quality of equipment and that it is the rider and only the rider, sometimes assisted by other riders who really wins races. Lewis Hamilton may be a great F1 driver but his car's performance will often be the differentiating factor.

August 15, 2014 | Unregistered CommenterJW

Carbon certainly allows the designers to play with the frame shape in a way that you couldn't with steel but at the end of the day, the geometry and performance is much the same. Whilst the big manufacturers still use parts from the big three component makers, they are increasingly manufacturing their own as well (sometimes under different brand names) so it's heading towards the automobile model.

As an aside, when I first got into cycling, in the 70s, you couldn't buy a fully built high end road bike. You had to buy a frame and the components separately. Sometimes the bike shop would put the bike together for you but the only complete factory built bikes were low end utility bikes.

August 16, 2014 | Unregistered CommenterYoav

I would disagree Yoav. My 1973 Motobecane Le Champion was equipped with anything but low end parts and frame! It was not the only bike either that came with top of the line parts from Campagnolo, Stronglight, 3 ttt, and with sew-ups. they were pushing 20 to 21 lbs, which was light in the day even with a 1lb Brooks Professional saddle. The frame was 531 DB too.

Dave, it is true that the bicycle and Insurance is basically the same. The difference is in the subtitles of performance of ride qualities. I have not seen Specialized Zertz inserts in any other carbon frame. Pinarello has their asymmetric frame design and there are other subtle differences too. Today, you get a wide variety of purpose built bikes from Tri to Touring and fat to fast. The range is growing too. Just look at the variety blooming in the fat bike market! In our day, the custom frame builder, like yourself, made frames customer specific.

The marketing offerings are now an exercise in configuration management to meet market demand or needs. That configuration includes wheel sizes dictated by purpose, frame desgin by purpose, drive train optons by purpose.

Enjoy you blog and the topics you offer! Keep them coming! I look every few days for new entries.

August 18, 2014 | Unregistered CommenterSJX426

Dave, I largely agree with you but I see your comment in a different light.
In the days of yore the steel frames looked very similar, because the tube OD was fixed, but tube gages and frame angles had hundreds of variations. You could get frames that fit you exactly, and were built for a specific use.
Today you have carbon frames that are trying to look different from each other, but no one will give you objective data on strength and stiffness. And they have to compete on looks because you have to settle for whatever comes out of the mold. Fixed sizes and angles are the rule for today.
Just one more reason why I still ride old frames, and a mix of equipment. I ride what suits my purpose (and what I like), not what marketing has pushed.

August 18, 2014 | Unregistered CommenterEdStainless

It is with Mountain Bikes that carbon fiber has, and will continue to make a huge difference. I ride a Russ Denny steel road bike, but a carbon Joe Breeze MTB.
Aluminum used to be the only choice in cross country and downhill (after steel was replaced), now carbon opens up new design possibilities along with lighter, stronger frames. Think about it: Aluminum has to be welded. Carbon can be formed into any shape, can be any thickness, can be one-piece or part of an assembly.
I think, and maybe Dave can comment, that road bikes are essentially the same design they have been over the decades. Sure, angles tightened when roads got better, but the frame reached optimal configuration years ago.
Not so with mountain bikes. Riding off-road is nothing like on the road. So the MTB design that started with a road bike with bigger tires is today radically different.
Funny how I can keep up with all my teammates on my retro steel Denny but could not do the same, if I rode my first MTB from from 20 years ago today!

August 19, 2014 | Unregistered CommenterSteve

Excellent article, we were just discussing this actually. Referring to the big three we noticed in our shop that the higher end stuff, including carbon, was made int Taiwan with the lower end stuff made in China. I get your point, ALL the frames are now being "produced" by the big three but not "manufactured" by the companies themselves. Perhaps the type of "cookie cutter" methods discussed here are one of the reasons so many shops have adopted very thorough bike fitting services. Replacing handlebars, stems, etc. to get a "proper bike fit". As it is said "it's all good" it's tough to make a living owning a bike shop with the very low mark up on new bikes and even tougher to be profitable as a frame builder. Just ask Grant Petersen, he mentions it at his Rivendell site. Enough said, we all love the bike industry anyway. Fun to watch all the Fat Bike changes over the years. Thanks for sharing your knowledge, wisdom and insight Dave. All the Best.

September 6, 2014 | Unregistered CommenterRideon

But not a great analogy - no one forces you to buy a bike, but the gov't forces you to buy car insurance. The UK market is pretty much a mess. The US much better regulated - and in both markets I deal with a "mutual" so I am actually one of the owners. I'm not so fixated on the price but more the likelihood of actual payout in case of loss.

The US Bike Big Three do offer a decent frame warranty. How they stand behind it varies (and with the dealer) but you can probably buy a similar (if not the same) frame for half the "name" price if you look hard enough. But is it worth the savings? Your choice - like choosing insurance, I guess :-)

September 10, 2014 | Unregistered CommenterSteveP

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