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"
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

RE[4]: Bummed to see this now
by M.Onty on Tue 23rd Aug 2011 14:13 in reply to "RE[3]: Bummed to see this now"
M.Onty Member since:
2009-10-23

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.


I feel slightly queesy now, thank you; as I hope Mr Jordan when he was informated of that fun fact.

P.S. Can we have a source if possible. You have my interest.

Edited 2011-08-23 14:14 UTC

Reply Parent Score: 2

RE[4]: Bummed to see this now
by kristoph on Wed 24th Aug 2011 18:54 in reply to "RE[3]: Bummed to see this now"
kristoph Member since:
2006-01-01

Ok, first of all, you said 10-20x previously and now, in your example, it's 4x which is more realistic cost of manufacturing.

However, that's totally irrelevant, because someone has to actually design the thing, test it, have it built, manage QA, package it, ship it, market it, ,sell it, support it (and I've not even mentioned the software involved).

Just saying 'x costs 1/4 to build and so it should be cheaper' is meaningless because 'building' something ignores all the costs of getting the thing to a consumer.

Reply Parent Score: 2

RE[4]: Bummed to see this now
by viton on Wed 24th Aug 2011 20:25 in reply to "RE[3]: Bummed to see this now"
viton Member since:
2005-08-09

tablet per unit manufacturing cost:$50

Can you provide a bill of materials to back up your number?
Like iSupply does.
The average cost of components of different tablets is around $300 by their estimate.

Edited 2011-08-24 20:26 UTC

Reply Parent Score: 2