Optional features expand ultrasound price points

Countervailing pressures for price cuts and enhanced performanceare shaping the product offerings of high-end radiology ultrasoundvendors. Formerly high-end scanners are competing on price inthe upper mid-tier of the market. At the same time, a new premiumtier offers users the quality and features they may require tosell imaging services in a more competitive health care environment.

Technology and price in effect have formed a double-edged productsword that ultrasound firms are using to slice away at each other'smarket position and the position of competing imaging modalities.

Despite current tightness in the ultrasound market, vendorsare stoking their R&D efforts and providing upgrades at arapid pace. But instead of including upgrades as part of the standardpackage for their premium scanners, the vendors are making morehigh-end features optional. High-end scanners without the latestoptions are transformed into sub-premium products at reduced prices:

• ATL's Extended Signal Processing (ESP) upgrade to itsUltramark 9 HDI (high-definition imaging) scanner introduced inApril (SCAN 4/21/93) will sell as an option that costs--dependingon the feature configuration--from $30,000 to $70,000 more thanthe basic Ultramark 9 HDI system.

• Acuson's Acoustic Response Technology (ART) upgradeintroduced last month (SCAN 5/19/93) will also be offered as anoption, costing 10% to 20% more than the existing price of Acuson'spremium 128 XP 10 scanner.

• Diasonics' VST Masters Series upgrade, to be revealedthis month (see story, page one), involves both standard and optionalfeatures.

Competition and technology evolution have brought the pricelevels of high-end scanners without the latest options to between$150,000 and $200,000, compared to prior levels of $200,000 andabove. Users can either reap that price windfall or reinvest inenhanced features.

ATL competes in the lower mid-tier of ultrasound with its Ultramark4 scanner. UM 4 is sold at a minimum $30,000 price, primarilyinto obstetric applications in the U.S. and for use in more generalimaging internationally, according to David M. Perozek, presidentand chief operating officer. Now that the UM 9 HDI unit with ESPsits on ATL's premium shelf, the standard UM 9 HDI scanner ispositioned to compete in the upper mid-tier.

International markets in particular will be pressing for color-flowsystems priced under $80,000 to $100,000, Perozek said. ATL expectsto compete in this product arena sometime in the future. Chancesare that the basic UM 9 platform can be developed and configuredto serve the sub-$100,000 pricing segment.

"There will be ways to move the technology there,"he told SCAN. "The midrange product area is more of an opportunityinternationally than in the United States, although the U.S. shouldexperience a significant trend that way as users watch their expendituresclosely."

ATL also plans to boost sales through an eventual expansioninto dedicated cardiac applications and by strengthening its positionin the Japanese market, he said.

The UM 9 scanner has been outfitted with transesophageal echocardiography(TEE) probes and other cardiac features that were not availablewhen HDI was first introduced two years ago (SCAN 4/24/91). UM9 is sold for use in cardiac applications, but only as part ofa general imaging procedure base.

ATL pulled back from dedicated cardiac sales when it developeda unified sales force to market the UM 9 in radiology. Now, thecardiology segment offers ATL significant potential for futuresales growth, in contrast to Hewlett-Packard, the cardiology ultrasoundmarket leader.

Dedicated cardiac imaging, while present internationally, ispredominantly a U.S. market, Perozek said. Cardiology sales constitute33% of the $2 billion worldwide ultrasound market, according toATL figures presented in the Seattle Times, which reported thismonth on the vendor's annual shareholders' meeting. This meetingwas the first since ATL separated from patient monitoring firmSpaceLabs.

Another growth opportunity for ATL lies in the $200 millionJapanese ultrasound market dominated by Toshiba and other Japanesesuppliers. ATL sells through a distributor in Japan. The Bothell,WA, firm intends to strengthen this distribution relationshipas it focuses on increasing share in the Japanese ultrasound market,Perozek said.