Oh, the Irony

The January 2012 issue of Model Railroader magazine includes a track plan for an N scale switching layout inspired by railroads around San Antonio, Texas.

The unintended ironic point is the prototype file photo that MR's editors used to illustrate the article: an Alco S‑2, noting in the caption that the S-2 "is typical of the 1950s motive power … to use" on the N scale layout. Oh, indeed, an S-2 would be perfect for the layout, as well as for many others.

But of course, there's been no mass-market N scale S-2 available for a couple of decades. And that model, from Arnold, was pretty poor (to put it as kindly as possible).

An elusive (in N scale, at least) S-2, this one in the later livery of one of my favorite shortlines, the Alameda Belt Line. Photo by Richard Silagi.

Just to rub salt in the wound, Athearn's latest big announcement is an HO GP-38-2 in the Genesis line. Really? A nice model, I'm sure. A lot like all the other HO GP-38-2 models (Atlas, Bachmann, Walthers/Life-Like). Including the existing lower-end RTR HO-GP-38-2 model -- from Athearn itself!

As I've mentioned before, a quality mass-market N scale Alco S-1/3 and/or S-2/4 switcher model would likely sell tens of thousands of copies. Yet model railroad manufacturers continue to crank out "me too" HO models. I guess it works on someone's marketing spreadsheet. I can't see how it makes sense in the real world, though.

I suppose that we can't hold it against MR's full-time editors. Apart from David Popp, the rest are primarily HO scalers. And I'm sure none of them could possibly imagine that such a popular engine in real life could be completely missing from the second most popular modeling scale.

Epilogue August 2012: Happily, Atlas and Bachmann just remedied this long-time issue with S-2 and S-4 N scale models respectively.

Power Failure

Why is there such a lack of decent-running affordable steam for Southern Pacific and Santa Fe in HO and N, yet the parade of Big Boys, 4-12-2s, and other oddball rarities (a Triplex?!) goes on and on? This question came up recently from one of my custom layout design clients. The neat transition-era California central valley HO layout we designed for him will lack decent SP and ATSF steam models appropriate for the layout's size and concept.

The conspiracy theorists (who are massively over-represented on model railroad forums) blame sinister plots dreamt up by evil marketers to force-feed us monster engines. But my technology marketing experience tells me that it's rare that marketing makes people buy something they absolutely don't want. I think the answer is simpler, but unfortunately still not hopeful for those looking to buy small-to-medium sized engines (especially of western oil-burning prototypes).

Let's take all the folks willing to buy a typical SP-style oil-burning 2‑8‑0, for example, in HO or N scale. Sure, there are plenty of SP modelers who would jump at one, but there's probably not a large general interest in the broader market. Just too plebeian for the masses.

SP 2‑8‑0 #2562 at West Oakland in 1954. Tom Gray photo from the Tom Dill collection. This locomotive is preserved and on display at the Arizona Railway Museum in Chandler, AZ. More locomotive info and photos here.

On the other hand, a Big Boy appeals to many more than just the UP modelers. I've seen these monstrosities running on generic 5X9s, Maine Central layouts, everywhere. (And looking silly in the process, but that's just me.) And of course, thousands of Big Boys reside in boxes or on shelves because modelers just had to have one, but it won't run on the tight curves of their HO 4X8 (or they don't have a layout at all).

Our hobby seems to be intrigued by the biggest, the fastest, the most powerful. The manufacturers build these big engines (and multiple releases and competing models of them) because they do sell. More's the pity, but it seems to be the case.

So if I'm a manufacturer, which market segment will I go after: the badly-needed offering for a smaller segment; or the "me too" Big Boy that has a chance at a small piece of a larger segment? The flashy rarities seem the safer bet in our upside-down modeling world, where the mass market does not have an interest or understanding of the realism gained by modeling typicality. But I wonder if that's really true?

If just one myopic model railroad product manager would instead consider the actual trends in the hobby, they would see that the interest in accuracy in modeling rosters is growing. And this is especially true among those building operating layouts – which by their nature usually need more than one of a particular locomotive type.

No, there aren't as many modelers overall as in the "gotta have a Big Boy" segment, but there are fewer competitors. And each of the operating modelers would probably buy multiple copies of the mid-sized to smaller steam locomotives needed to fill out an operating roster.

Why do I believe this? Because modelers buy the diesel equivalents in very large numbers. SP 2‑8‑0 Consolidations were the GP-7s of their day -- and Geeps are popular year-in and year-out because of their usefulness on a variety of layouts. Yes, the odd (literally) DD40AX will sell, but tens of thousands more modelers buy Geeps.

So whaddaya say, model railroad manufacturers? How about one decent oil burning western prototype small-to-midsize loco?

No, I'm not holding my breath.

Marketing Math

What kind of a bizarre parallel universe is it where 7 is greater than 117? 23 greater than 1500? 7 months longer than 10 years? Wherever that strange universe may be, it's apparently where model railroad product managers dwell. How else to explain the recent decisions by Athearn and Atlas to develop new HO scale models of the GP‑40X and RS‑36 respectively, but not to offer the Alco S‑2/4 in N scale?

For those trying to keep score at home, here's how it breaks down. A mere seven railroads purchased RS‑36s new, compared with 117 who bought S‑2s. And with the resale market, there might be another 100 or more prototypes that rostered S‑2s at some time.

The GP‑40X sold even more poorly in the real world -- a mere 23 units vs. over 1500 S‑2s. And the GP‑40X's ephemeral production span of seven months does not compare favorably with the S‑2's ten-year production run. (Throw in the similar S‑4 and that expands to 21 years -- about 36 times longer than the GP-40X!)

So how can tooling-up and producing these new HO models of pretty rare prototypes be seen as a better business decision than releasing a quality S‑2 in N scale*? HO chauvinists will point to the smaller market for N scale. OK, maybe … but here's where the math gets interesting. If a recent survey by a model railroading market participant is correct, there are about 2.79 times more HO scale buyers than N scale buyers. Let's give HO'ers the benefit of the doubt and round up to three.

OK, now let's apply this to the numbers above. If there were 1500 real-life S‑2s produced versus 23 GP‑40Xs (and we apply the 3X HO vs. N ratio), the market for N scale S-2s is a whopping 2000%+ larger. But maybe numbers produced isn't the best measure. OK, let's take number of road names for the marginally more successful of the two prototypes, the RS‑36. If 117 prototype railroads bought S‑2s new and just 7 bought RS‑36s (and remembering to apply the 3-to-1 HO market size advantage), the N scale S‑2 market size is still more than 500% greater than is the HO scale RS‑36 market size. That's even before considering the many hand-me-down owners of S‑2s over the years.

Yes, I understand that bringing out a new model requires more than just the tooling for a new body shell: the availability of an appropriate drive train and chassis is also a factor. And the S‑2 is a physically small model in N scale (though not smaller than Kato's recent successful N scale NW‑2), increasing the design challenge.

Estimating market sizes is difficult. I often make market estimates for my technology marketing consulting clients and there are always uncertainties. But a 500% to 2000% larger market potential seems like a pretty straightforward decision to me. Why do model railroad manufacturers stubbornly leave this money on the table? You'll have to ask them -- and I hope that you do.

*No, I haven’t forgotten about the old Arnold S‑2 (although I'd like to). But these are of very old design, suffer from cracked gears, and most samples run like rusty meat-grinders. No offense to the meat-grinders. I have one of these in custom SP paint that has had hours of custom care and rebuilding by an expert. It still runs like a train-set Tyco. And even that's a huge improvement over the out-of-the-box performance.