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Roy Schestowitz <newsgroups@xxxxxxxxxxxxxxx> espoused:
> __/ [ Mark Kent ] on Thursday 29 June 2006 08:08 \__
>
>> begin oe_protect.scr
>> Roy Schestowitz <newsgroups@xxxxxxxxxxxxxxx> espoused:
>>> __/ [ Larry Qualig ] on Thursday 29 June 2006 00:33 \__
>>>
>>>> Peter Köhlmann wrote:
>>>>> Larry Qualig wrote:
>>>>>
>>>>> > Mark Kunt - You are nothing but an ignorant hypocrite. Figures that a
>>>>> > hypocrite like you would whine and cry about Kelsey calling you names
>>>>> > but you have no problems calling others names. Physician... heal
>>>>> > thyself.
>>>>> >
>>>>> > BTW retard - learn to use Google. Sony will be deliberately selling
>>>>> > PS3 at a LOSS to the tune of about $820 million dollars in the first
>>>>> > year.
>>>>>
>>>>> Poor Msg-ID Larry
>>>>> How can we help?
>>>>
>>>> I don't need the help of a homophobe like you. Never have and never
>>>> will.
>>>
>>> Larry, with all due respect, you have sunk to an all-time low. Mark
>>> falsely (yet politely and innocently) pointed something out. Response, you
>>> told him something along the lines of FOAD. I have a hard time coming to
>>> grips with the fact that you are roughly my father's age. Do you also
>>> throw fits at your family? And are subject line insults back in fashion,
>>> so to speak? Are you trying to punish him?
>>>
>>
>> I'm not wrong, btw - Sony's plan is that the PS3 will be profitable over
>> its lifetime, as per standard volume manufacturing. In all volume
>> manufacturing, the initial production run loses money because the
>> up-front setup costs are very high in deed. After a certain number of
>> units are sold, then the run begins to make money. This is why unit
>> pricing usually has little to do with cost of manufacture /because/ cost
>> of manufacture is /not/ a linear thing (might seem counter intuitive,
>> but there we go).
>>
>> The PS3 is /not/ being sold at a loss, the xbox is. Your troll remains
>> both abusive and wrong.
>
> Yes, I read your rebuttal. For completeness, here it is aagin:
>
> ,----[ Older message ]
>| This price does not represent the cost, it represents the price which
>| the manufacturers believe the "early adopters" will be prepared to pay.
>| Within two years, the price will be less than half that, within four
>| years, it will be 20% of that, declining over the remainder of the
>| decade to 10% or less. Consider that DVD players now cost GBP20 here!
>|
>| Consider a little deeper - what's the difference between a blu-ray
>| player and a blu-ray player which is also a games console? Very little
>| indeed, if you think about it very hard. Everything is a computer, now.
>|
>| L>
>| L> It is indeed the nature of the console industry; you sell the consoles
>| L> at or below cost, and make the profits on selling licenses to game
>| L> companies to develop software for them.
>| L>
>|
>| I know Microsoft have done this, but I'm not so sure that Sony have.
>| Sony have many years of experience in the incredibly tight-margin consumer
>| industry, and know how to get their production costs managed properly.
>| Microsoft do not.
> `----
>
Thanks for noting that. Incidentally, this issue highlights one of the
huge differences between the production of software and the production
of hardware, and yet we need both...
In common, they share the initial design costs. An idea must be had by
someone, a team must formulate the initial design.
* In hardware, that can probably be prototyped in a lab, but the lab
* costs for setup are not going to be insignificant, will involve test
* equipment and so on. In the case of a chip design, then it's just very
* very expensive from this moment on (I guess you could do an asic version
* first as a POC). At no point in this cycle so far is the development
* cost sharable.
* In software, life from this point on is much easier; a compiler
* tool-chain is relatively inexpensive, (a boot sale will get you one
* for next to nothing!), and any old room will do. If you go
* open-source, you get to share your development costs with someone
* else, too.
- For hardware, you now need to setup your fab/production lines, and get
manufacturing. You need a supplier chain in place for your raw
materials, and good logistics management to get stuff in and out. You
need to manage energy costs carefully. You need to distribute your
goods afterwards, possibly requiring signficant marketing muscle to do
to.
- For software, you press CDs and post them to people.
Consequently, hardware costs are never, at any point, fixed. A revenue
figure, R, needs to be estimated against a cost of manufacture &
distribution, M. An overhead figure, O needs to be understood.
Profitability is making sure that R > O+M + D. D is the cost of the
initial design & prototyping.
This might seem simple, /except/, you do not know whether your product
will be successful (many are not), you do not know for how /long/ it
will sell, even if it does. You do not know how competitive the
marketplace will become, nor do you know how stable your raw material
costs or distribution costs will be.
The /only/ time you can know "R" properly is at the /end/ of a
production run, same for M, but perhaps not for O.
This is why the concept of "selling at a loss" or "dumping" is
none-trivial. I think that government economists tend to take the
simplistic view of estimating costs of raw materials and labour in
trying to calculate the base cost of something, but are not very good at
taking account of setup of production costs, because that's very
difficult.
This is why a standard design, like the IBM PC, or the new ATCA chassis
design, are leapt on by some many manufacturers. Once the design has
already been completed, there's no D to pay, raw material prices are
global-market-based, so the figures which can be addressed are O and M.
O can be affected by setting up shop in a low-wage country, and M by
sourcing a fab as inexpensively as possible.
--
| Mark Kent -- mark at ellandroad dot demon dot co dot uk |
"Your mother was a hamster, and your father smelt of elderberries!"
-- Monty Python and the Holy Grail
|
|
