What’s Happening With Heathkit and Radio Shack?

Jan. 12, 2015
One of our favorite electronic suppliers is gone and the other may be on their way out of business. I wonder why? Given the continued growth and popularity of electronic equipment and the emergence of the maker DIY movement, you would think business would be booming for both.
One of our favorite electronic suppliers is gone and the other may be on their way out of business.  I wonder why?  Given the continued growth and popularity of electronic equipment and the emergence of the maker DIY movement, you would think business would be booming for both.

You remember Heathkit, the world’s largest kit provider.  They went out of business in 1992 but the Educational Systems group of Heahtkit survived until 2012.  Then in December of 2013, the owners of the Heathkit brand and IP held an online Q&A asking potential customers what they wanted in the way of new products.  There was an implied tease of forthcoming new products within about a year.  It has yet to emerge.  Did they get cold feet or just run out of money?

As an ex-VP at Heathkit, I often wonder what I would have done if I owned the assets.  Heathkit is widely known and much admired and many have expressed enthusiasm about buying new kits.  There is an existing market but I think time is running out.  Before too long those who remember Heathkit will be gone and that nascent market will go away.  I’m not saying they could not make it without the gray-hair enthusiasts but it would be difficult.  My grandkids do not know Heathkit nor do the mass of 20 and 30-somethings that are potential buyers.  The Heathkit owners better get a move on and do something soon or lose a rare chance to make a great come-back. 

I can only imagine the agony of the Heathkit owners of trying to come up with a new product line.  The kit business is not as simple as it used to be.  Electronics is far more sophisticated and complex today.  It is difficult to attract buyers with basic kits with a few simple ICs and a flashing LED.  In the past you could fix anything with a multimeter or VTVM (remember those?).  Today, you need a 10 GHz oscilloscope and a spectrum analyzer to test electronics.  In addition, even middle schoolers have smartphones and GoPro cameras.  A two-bit kit is boring.  I suspect the Heathkit owners may be thinking of reselling existing products like quadcopters from China and Rasberry Pi and Arduino embedded computer packages rather than try to engineer their own stuff.  Creating innovative new kits is not easy.

I would probably try for some ham radio products.  The amateur radio market is relatively small but hams are real DIYers and most still have a warm spot in their heart for Heathkit.  Start with ham gear and build from there.  The educational products were also popular.  Do some updated learning kits or programs.  Tie into the STEM movement.  Heathkit could fit nicely into the maker-kit niche and be a good income producer for the owners.  But, in my opinion, time is running out for them.  Either re-enter the market or sell the assets to someone who will commit.

With the success of DIY kit companies like adafruit, SparkFun, Ramsey, Jameco and MAKE magazine, you would think this would be a good business.  It is a great niche that is hungry for some innovative new kits.

RadioShack is a whole other story.  They are losing money and nearing a state of bankruptcy unless some new financing becomes available, quickly.  They have closed hundreds of their stores and layoffs are inevitable.  RadioShack has no real products of their own.  They are repackagers and resellers of products made by others.  They have survived these past years by selling cell phones and services.  Now, even that is not working.  They seem to lack focus and customers do not know them.

Radio Shack is known in the hobbyist world for parts and accessories.  I still buy batteries there as well as the occasional connector or cable.  But you can buy that stuff at Best Buy and Walmart these days. I bought a radio controlled car there a few years ago for my grandson.  I just do not think to go there for other electronic stuff.  I suspect the online sales of electronic products and parts have literally wiped out its core business.  I hate to see RadioShack go away as it has been such a major fixture and resource of electronics for decades.  They need a hot product of their own like the TRS-80 in the 1970s.

One good way to get back on track is to get rid of the redundant stores.  RadioShack has over 4000 stores.  There are so many in suburban areas they compete with one another.  Where I live here in Texas, I have five RadioShack stores roughly equidistant from my house.  Which one do I use?  Close those losing multiple stores.

RadioShack has an identity crisis.  I am not sure what it stands for.  Did you know that it is an Apple reseller?   It is a brick and mortar business in an online world.  I wonder what the plan is going forward.  I hope it is not bankruptcy.  What are your thoughts on a strategic survival plan for the company?  Add your comments here as it will be interesting to all of us and the executives in Fort Worth to hear what might work.

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