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Originally Posted by Pinecone
But OTOH, showing Sony's past ways, you will ONLY be able to buy from the Sony Store using WiFi.  |
This isn't exactly different from the other major players in the market to date.
Quote:
Originally Posted by Pinecone
And EVERY cost is passed on the consumer. Plus design costs, integration costs, additiona parts (boards and wiring). And profit and overhead costs.
So that $1 chip may end up cost me $20 or more. For something I don't want, need, or use.
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The 20$ figure is a pretty large exaggeration. If we want to talk about individual features, let's say the feature costs me 1 man month to do that work. Let's make it 2 to be generous. I pay 100k/year for the employee. Let's also assume a small but realistic number that I set for the "break-even" point when I calculate how to distribute the cost of the WiFi feature.
So, for the 2 months work, I pay 16.6k. Divided by the 100k units, I'm paying roughly 17 cents for the labor per unit. So let's make that 1.20$ on a 1$ BOM cost for the chip itself. Add on a generous 30% margin, and we are still at 1.56$. Even if I bump it up to one man-year for the feature, the additional cost + 30% margin is still 2.60$. That's smaller than 20$ by a factor of 10. Again, odds are that savings that small aren't going to be passed on either way.
At this point, companies look at the feature set that they can provide at a price point. If their margins have to shift a little to hold that price point, they will do it... especially since the development costs were fixed and their margins get better as sales get better. For something like this, it makes business sense to just eat the smaller margins if needed in order to open themselves up to the larger audience and make it up in volume, but cutting the feature means that they won't likely get the volume they want. It's all about give and take.