Quote:
Originally Posted by Scarpad
If thats the Case give me the device for free or relatively low cost. or charge me 3 bucks a month for it like a cable box.
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That would be fitting if the device would be useless without the service, like cable boxes. Or if somebody else owns it and leases it to you.
But when the device has at least some value without the service the most the vendor can properly do is discount it. They have no way to actually *force* you to use the linked services after all. Think of the TiVo's: you buy the hardware, pay for the TiVo service to be able to use the box, and you pay again wth your eyeballs watching commercials. But if you don't actually watch TV they don't get the ad revenues. (Apparently, the ad revenue is where their profit comes from.) Microsoft ran into that problem with the original XBOX: they were looking to make money off the games but once hackers figured out how to turn them into media centers with XBMC a far amount of XBOXes were sold that never generated game revenue. Vendors don't like when people do that to their business plans.
There's a whole lot of different subsidized-hardware business models for different products depending on the exact situation. Razors and razor blades is one extreme--the razors are cheap enough to manufacture in volume that even if they go unused the cost of giving them away doesn't impact profitability but other products don't have that luxury. So the subsidy tends to be just enough to make the product entice but not enough the company goes out of business.