Linked by Thom Holwerda on Mon 22nd Aug 2011 21:19 UTC
PDAs, Cellphones, Wireless Last week, HP killed its webOS devices unit. Over the weekend, the company slashed the prices on the TouchPad. The result? The TouchPad sold out completely in a matter of hours. This confirms what I've been hearing from friends and family: "I'd love a tablet, but I'm not paying laptop money for one."
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RE[3]: Bummed to see this now
by unclefester on Tue 23rd Aug 2011 07:28 UTC in reply to "RE[2]: Bummed to see this now"
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You are completely confusing net profit with gross margins.

No manufacturing company ever operates on 5% gross margins.

If you think HP is paying $475 per tablet to the Chinese manufacturer you are hallucinating.

tablet per unit manufacturing cost:$50
trade price $100 (paid by HP)
wholesale price $400 (paid by computer store)
retail price $500 (paid by consumer)

At each stage about 10% net profit is made after costs.

BTW designer clothes and accessories typically sell for ~100x the manufacturing cost. Designer brand polo shirts cost $~0.8 to make in China. Top designer brand jeans $~2. Most of the retail cost is due to sponsorship and marketing.

The single largest cost for Nike at one stage was sponsorship of Michael Jordan. He was paid more than the entire combined wages bill of all the employees in the manufacturing division.

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