Sony PRS-T1

[Pinecone]

But OTOH, showing Sony's past ways, you will ONLY be able to buy from the Sony Store using WiFi.

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.

[Kolenka]

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.

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.

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.

[Pinecone]

Overhead is normally 100 - 125% of what you pay an employee.

That covers, the employer part of the FICA and Medicare (in the US) the cost of other benefits, the cost of the employees supervisor, and his supervisor. And the people in HR, and payroll. And things like space, lights, computers, power, telephone (service and equipment), etc, etc.

Then add profit.
And then there is the idea of not the cost, but what are people willing to pay for this feature.

[Kolenka]

Originally Posted by Pinecone

Overhead is normally 100 - 125% of what you pay an employee.

That covers, the employer part of the FICA and Medicare (in the US) the cost of other benefits, the cost of the employees supervisor, and his supervisor. And the people in HR, and payroll. And things like space, lights, computers, power, telephone (service and equipment), etc, etc.

Then add profit.
And then there is the idea of not the cost, but what are people willing to pay for this feature.

Good point, there is additional overhead, but even accounting for that affects the whole product, not a single feature. A lot of that cost doesn't go away if I cut out a feature from the product. So even if I double my exaggerated man year cost to account for the overhead of development of that feature, we are still in the realm of 3-4$ for it, including 30% gross margins. Those are the sort of margins Apple gets to enjoy on their stuff. With the possible exception of Sony, I doubt any in the eReader industry are enjoying those sorts of margins on the device itself. I doubt any of the OEMs could get away with margins in the multi-hundred percent range (20$ vs cost of 4$, as an example). My whole point was that 20$ is extremely exaggerated, and plucked out of the air without at least being grounded in reality. The concept of "what the customer will pay" for a feature these days is more about finding out if it is viable to get the per-unit cost low enough that the returns either through higher volume and/or prices is beneficial.

Already the margins on the device are becoming razor thin, with the notion that it's an engine to generate book sales with their store. The fact that WiFi enables that even more makes it more likely for an OEM to accept smaller margins, not demand bigger ones. Especially in the face of competitors who are selling the razor near or at cost because they know they can sell you the blades too.

Without WiFi you will have no internet connection which means you will have that whole segment of people who will be screaming that they don't have a web browser in their new highly overpriced Sony reader. Nevermind that most web browsers within eInk readers are rubbish due to the nature of eInk.

Also, why argue about the WiFi chip raising the price? Sony will overcharge for the darn thing regardless. What difference does it make if you have to pay $255/reader rather than $250? Every other manufacturer will be selling theirs for $140 or less. Face it, if arrogant Sony builds it you will be paying out of the a$$ to buy it regardless of how many or how few features it has. Assuming of course you can even find one to buy.

[khalleron]

I wouldn't be interested if it only links to the Sony Store, but if it accesses Google Books (even if I have to go through the Sony Store to get there), then I'm on board.

Jack, you may think the Sony is vastly overpriced, but the fact that they seem to sell all they can make means that many, many people disagree with you.

Sure, I'd like them to be cheaper, but having dropped my 505 on hard surfaces more than once, I'm quite happy with paying more for the quality.

[elcreative]

Originally Posted by jswinden

Without WiFi you will have no internet connection which means you will have that whole segment of people who will be screaming that they don't have a web browser in their new highly overpriced Sony reader. Nevermind that most web browsers within eInk readers are rubbish due to the nature of eInk.

Also, why argue about the WiFi chip raising the price? Sony will overcharge for the darn thing regardless. What difference does it make if you have to pay $255/reader rather than $250? Every other manufacturer will be selling theirs for $140 or less. Face it, if arrogant Sony builds it you will be paying out of the a$$ to buy it regardless of how many or how few features it has. Assuming of course you can even find one to buy.

Yawn... another arrogant company... again. Why not list 'em once and then turn the record over...