Question-and-Answer Session
Operator
Thank you. The question-and-answer session will be conducted electronically. (Operator Instructions). And we'll hear first from Richard Shannon with Northland Securities.
Richard Shannon - Northland Securities
Hi Steve. How are you?
Steve Tirado
Good.
Richard Shannon - Northland Securities
Good. I guess the first question from me is on the product gross margins. If I did my calculations right, I got a 41% for the quarter, which is down a fair amount. Kind of curious if this is kind of a new range here that we should expect or should we see some improvement as you see a more newer products come in? I know you mentioned Steve in your script about several low point in terms of legacy product share. What's your picture understanding of where we think that can go in the third quarter and maybe into the future?
Harold Covert
Yeah, so Richard this is Hal. So I think, in Q2 our product gross was margin was about 42%, pretty close to what you just said. As I indicated in my prepared remarks, we believe that we had about a 3 percentage point hit during the quarter from our negative variances and the overhead volume that we have at the present time.
We believe that the negative variances are behind us now and are going forward; the product margin will improve and head it back up towards the mid-45 to 50% range over the next few quarters.
With all those impacts we actually would have been a little bit above 55% gross margin for the quarter on a total basis. So we do believe that as we move forward, the product gross margins will improve in the back half of the year. And then as we get into 2010 when we were in kind of the full rollout of our new products, we should push back towards our targeted range.
Richard Shannon - Northland Securities
Okay. Okay. The comments, Steve correct me if I am wrong, I had to moving up out of some calls here, I've got a couple going. But in terms of the legacy between products, was there... are you experiencing some market share losses in their pricing that's creating a difficulty here in near term?
Steve Tirado
You mean in terms of the gross margins?
Richard Shannon - Northland Securities
Yes.
Steve Tirado
The gross margin was really just what Hal said, if we look at our ASP decline is within normal parameters and we experience a 4 to 5% decline on a quarterly basis, just that our business, it really was the variance and the volume that drove the product margin down. And what we expect is that as we roll the new products out which have better characteristics in terms of gross margin, you'll see our margins improve.
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