Lines Form for $99 TouchPad, Now Sold Out
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: Bummed to see this now
by unclefester on Tue 23rd Aug 2011 05:55 UTC in reply to "Bummed to see this now"
unclefester
Member since:
2007-01-13

If phones running these kinds of specs cost $500-$600, I'm not sure why you think somebody can make a tablet (with an even bigger screen) and sell it for $200 less, and have it not suck. Possibly the only company that could do it is Apple, since nobody else makes money off of app sales, but Apple sure as hell won't do it, so long as people are always lined up to purchase an iPad.


You obviously know nothing about economics.

Most products retail for at least 10-20 times the manufacturing cost.

Those $500 phones almost certainly have a unit manufacturing cost of <<$50 each.

Reply Parent Score: 0

RE[2]: Bummed to see this now
by kristoph on Tue 23rd Aug 2011 06:01 in reply to "RE: Bummed to see this now"
kristoph Member since:
2006-01-01

You obviously know nothing about economics.

Most products retail for at least 10-20 times the manufacturing cost.

Those $500 phones almost certainly have a unit manufacturing cost of


You do understand that the reason why HP is getting out of the TouchPad and the desktop PC business (which they currently dominate) is because the margins are like minuscule (5% at best).

Sure, premium clothing and accessories might sell for 10-20 their manufacturing cost but consumer electronics never had these type of margins.

Reply Parent Score: 4

unclefester Member since:
2007-01-13

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.

eg:
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.

Reply Parent Score: 3

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RE: Bummed to see this now
by karunko on Tue 23rd Aug 2011 14:22 in reply to "RE[2]: Bummed to see this now"
karunko Member since:
2008-10-28

You do understand that the reason why HP is getting out of the TouchPad and the desktop PC business (which they currently dominate) is because the margins are like minuscule (5% at best).

That makes for a quick explanation but there are many other factors to consider:

1) Companies (and HP is certainly not the only one in this respect) expect a much quicker turn around for their investment than it used to be. For instance when Xerox funded the Palo Alto Research Center in the early 70s they were expecting a profit in 10 (ten) years! (see "Dealers of Lightning: Xerox Parc and the Dawn of the Computer Age" for some perspective).

2) HP's CEO comes from SAP, a software colossus, and knows absolutely nothing about hardware -- and probably doesn't understand it either.


RT.

Reply Parent Score: 1