It's not a product which is very close to the conventional cigarette and I think the consumers are looking for something which is at least similar. ... But it's a new category so everyone is working on how to improve it. Years from now the situation may be different but today I don't think that the product is performing well on the taste side. ... I don't think the consumer really has the confidence if what they're buying is something which they'd like to use. Today it's much more the phenomena of the price than anything else. -- Jacek Olczak, Chief Financial Officer, Philip Morris International Inc. --
I've been on quite a few analyst conference calls, so I'm going to be potentially annoying and break that quote apart sentence by sentence.
First, it's the CFO talking, not the CEO. Philip Morris has not decided on a strategy.
It's not a product which is very close to the conventional cigarette and I think the consumers are looking for something which is at least similar.
Decode: This is "Form Factor" argument. Let's be honest - the majority of
current potential e-cig customers are used to the cigarette/cigar look and feel. PM doesn't have a strategy here because they're not sure a market of sufficient size will solidify. Keep in mind
we[/I (ECF members and others in the vaping community) are still very much in the minority position.
But it's a new category so everyone is working on how to improve it.
Decode: Let the "early adopters" debug the system. We'll buy out the winners when the dust settles.
Years from now the situation may be different but today I don't think that the product is performing well on the taste side.
Decode: Same as immediately above. The critique of taste applies to e-cig form factors, not mods - and PM is correct on this point. They're waiting for the first wave of market consolidation, and..the FDA. 
I don't think the consumer really has the confidence if what they're buying is something which they'd like to use.
Decode: Their market research is telling them entry-level e-cigs are not performing well enough to convert the majority of the customer base. Also, the Fear Uncertainty and Doubt (FUD) in the press is resonating. Again, PM is correct on all fronts here.
Today it's much more the phenomena of the price than anything else.
Decode: When Big Tobacco enters the market - and they will - prices will rise. BT is willing to take near-term loss of business risk while the market shakes itself out. It's a standard risk model approach.
That said, if a market does form, or the current one grows to sufficient size, BT will enter and have to cover buyout costs. There have already been buyout offers of smaller players. What do you think the true market leaders will fetch in two to four years? Who do you think the market leaders will be? Think it through before you react.
It's a "wait and see" strategy, and it's often how successful big businesses stay that way.
Yer, with their staggering stupidity it makes you wonder how they ever got so big and powerfull.
