Genesis once bubbled...
Distribution costs money. Direct sales are more efficient.
Only with the advent of the internet has direct sales been more efficient for an industry the size of SCUBA. It was too expensive to have multiple salespeople running around the globe peddling their lines to LDS who were the only customer contact point.
Genesis once bubbled...
I doubt very much that equipment costs will go up, even if diver counts go down.
As far as equipment costs not going up, I would say there is a better than 50/50 chance that they will for the 'higher' ticket items (reg, BCDs, etc..). Why?
1. The power is concentrated in a very few companies who legally or illegally can conspire to raise prices (I believe you are of the opinion that they are doing that now, so why would they stop?)
2. The SCUBA industry is so small it is unlikely to warrant any type of anti-trust investigation and the industry is obviously concerned about any level of government involvment so it is unlikely any insiders will raise the issue to Washington.
3. Divers are conditioned to paying higher prices. In a direct model, manufacturers could raise their prices by 50% and still offer consumers a 25% savings over what they are paying today. All manufacturers have to do is keep prices at a level where the margins are not so good as to attract new entrants into the market. If the diving market continues to shrink (or be flat) then they will have more wiggle room as new business aren't usually all that interested in joining a mature market...they prefer one where the growth rate is big.
What is the basis of 'your doubt'?
Genesis once bubbled...
The LDS, however, is definitely in trouble, at least as a "full service" shop - mostly due to their failure to actually BE "full service."
While your consistent message has always been that the LDS's "service failure" or "value proposition" will be their cause for their demise, I mostly disagree. It is really a matter of economics.
As stated above, the volume of sales are so small for an LDS that it can't support its overhead without charging prices that are higher than the online providers. Even if the shop gave EXCELLENT service, most people aren't willing to pay 50% more for that service.
One could argue that if the LDS were allowed to offer/advertise competitive prices over the Net then they would have greater volume over which to spread their overhead. If they could execute (which is questionable given the resources available to most LDS), they risk canniablizing their retail sales and would need to double or perhaps triple their sales volume in order to generate sufficient margins. While this was possible in the high growth, large market time of the 80s and 90s for PCs, telecom equip etc....the SCUBA industry pie is getting smaller (or at least staying the same), so any volume will come at the expense of another....which will result in fewer LDSs which will allow the manufacturers to take back direct contact with consumers....at least for the big stuff where THEY set the price...
Genesis once bubbled...
I look forward to these changes.... 
Only time will tell if your eagerness for these changes will be tempered by a good dose of economic reality. As YOU have expressed many times in the past, people operate in their own economic self-interest....so
1. Don't expect LDS to lay down and be slaughtered.
2. Don't expect the manufacturers to give up an opporunity to make more $$
3. Except for the DIYers and those with gills, divers DON'T have long-term purchasing power. This is a seller's market.
Assumptions to the above that may not hold true.
1. Goverment regulator stays out....if C-CARDS become required for equipment purchases, then the DIRECT model gets more complicated. If I were and LDS, this MIGHT be a tactic I would use.
2. Manufactuers are savvy and interested enough to seize this opportunity. There are some smart guys there, but many of them are better engineers than businessmen.
3. Timeframe for all of these changes is probably 5 year+. Except for #1, changes in this industry take time.
