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Old 07-09-2010, 11:27 AM   #2
mgmueller
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Posts: 3,131
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Join Date: Nov 2008
Location: Augsburg (near Munich), Germany
Device: 26 Readers, 44 Tablets
Quote:
Originally Posted by thinkpadx View Post
Seriously $399 for a 6 inch e-ink display is just way to expensive with all the price slashing all around. You get a Kindle DX Graphite for $379.

What are Spring Design thinking, who's going to buy their reader for this price? Don't get me wrong I would love to get a Alex. I think it's very different from the Kindle but not at that price.
I haven't seen any figures. But if I look at the very small number of threads about Alex, the sales figures might have been bad from the beginning.
In general, figures of most ePaper devices seem way smaller than what we here now from iPad.
If so, it's the old discussion: Cutting the price in half, hoping to sell at least 3 times as many units or sticking to the price.

I only can compare to my employer:
Hardware Gross Margin is about 50%. This may sound a lot, but actually it's the lower limit. General administration, sales and other costs usually are about 25%. In small corporates (is Spring Design a startup?) it's even worse. Costs for R&D, but no or very limited cashflow.
Then it's usually extremely difficult, to reduce prices.
Amazon can do so. For them it's about market share and they have a huge "cash cow" in their core business.
Spring Design probably doesn't have any additional cash flow.

Let's assume, their Gross Margin (which is NOT profit, that's before internal costs and taxes) would be 35%. So they might be able to reduce their price by maybe 15%, else they would make a loss for every unit they sell (and they can't compensate yet with book sales). Would 15% make any difference? Would their sales figures double? I highly doubt that.
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