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  1. DRFP's Avatar
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       #1  
    Material costs make it unlikely that other tablet manufacturers can go much below the $199 price point right now, says Chris Connery, vice president of PC and IT displays for market researcher DisplaySearch.
    At 75% Off, the H-P TouchPad is No Bargain - Pay Dirt - SmartMoney

    This is right now, much lower than the 307 I have been seeing

    I suspect you could squeeze a manufacture into the 175 range and now you are talking

    175 to make with 250 retail = 75 range and some profit there.

    I would handle it like this

    HP: We do not want to make these tablets any more but maybe if we can get the manufacturing cost down to lets say 175 or 180 we would be interested like 5 million units.

    Manufacture: Can't be done we need 300 a tablet to make it.

    HP: Ok than no deal.........ever...... people will not pay retail 400 and 500 we need the price down so we can charge 250 retail it will sell then.

    Manufacture: So If I drop the price of making this for you then we have a deal?

    HP: if you don't drop the price for us then you go back to making IPAD copies that don't work and selling them for $100 retail, this would be real and people would want it.

    Hmm.................

    Honestly I think its greed, I think the manufactures who make the touchpad phones for dirt cheap and the other tablets dirt cheap gouged HP

    time to get real
  2. #2  
    I hate to get accounting complex, but there is a significant difference between full cost and marginal cost.

    Big companies allocate many fixed costs which are added into the cost for accounting purposes. There could be an r&d allocation, a corporate overhead allocation, etc. for purposes of determining profit on each unit sold.

    For decision making purposes going forward on a discontinued product, it is more important to consider that which is already spent as sunk costs and do a marginal cost analysis going forward. For instance, if the parts are already purchased and sitting in a wharehouse, the decision is how much the cost of assembling the product compared to the marginal revenue for sale of the unit. You might also want to throw into the analysis the reduction of damages or claims from suppliers by taking parts.

    So, if for instance, it costs $50 to assemble and ship the product and you get $100 in revenue for the sale of the product, then you made $50 per unit on the margin.
  3. #3  
    You need to know cost accounting to figure this one out. ( Accountant here) Overhead , advertising etc. anything under $400 you looses money if the cost of the units I read to build is correct. ANything under $400 for this tablet is a loss. those cheap $125 tablets on ebay cost probally $70 to build in China and no advertising , little overhead and they pay the folks like $1 an hour etc.
  4. DRFP's Avatar
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       #4  
    Yeah accounting............... Look the cost of the Pad is 307 to make if it is 175 to make then it costs less......... Does not take accounting to realize this

    COme on

    all the attached costs can be configured in a product to produce it at a lower cost

    using what both of you posted a can of 90 cents soup must cost a fraction of a cent to just make market and sell........... I don't think so

    How about the cost of making a phone with a touchscreen? How can they be retailed at $100 or less? Are you trying to say the manufacturing cost of the phones is just a few dollars? Again I do not think so


    Sigh.......
    You need to know cost accounting to figure this one out. ( Accountant here) Overhead , advertising etc. anything under $400 you looses money if the cost of the units I read to build is correct. ANything under $400 for this tablet is a loss.
    Really? You know one time you could not get a computer for your home for less than 3,000
    then 2,000
    then 1,500 for a laptop

    now there are laptops for as low as $250, real laptops

    SO thinking "It can't be done" is short sighted and honestly I wonder if you are talking about Ipad? Hmm
    Last edited by drfp; 09/01/2011 at 11:30 AM.
  5. #5  
    That kool-aid has really gone to your head.
    If it were that simple, why wouldn't HP have just done that in the first place? Why wouldn't every manufacturer just say no until costs go down?

    Basically, there is just no way for a quality tablet to be built right now for less than (figure out of my ***) $200. Just look at the no-name Android tablets you can get for 99 bucks. Resistive low res screen, all plastic materials, no ram, slow processor. If that sells for 99 bucks, what makes you think that glass, capacitive touch, aluminum, ram, dual core, and so on could sell for 250? Never mind the cost of components, think about research, marketing, all that other stuff that goes into the cost of the product.

    Eventually, tablets are going to be cheaper. We're just not there yet.
  6. #6  
    Your reading into and adding things I did not say. I Never said it cant be done. it cant be done at this time. Over time the parts come down. overhead comes down. As demand goes up the per part price goes down because you can produce more at a time. SUre TV's were $3000. they did not suddenly drop to $500 . it took a few years. Tablets are generally $500 ish . seeing a few now for $399 etc. whithin 2 years I can see a top of the line tablet for $199 or maybe just maybe $175 .


    Quote Originally Posted by drfp View Post
    Yeah accounting............... Look the cost of the Pad is 307 to make if it is 175 to make then it costs less......... Does not take accounting to realize this

    COme on

    all the attached costs can be configured in a product to produce it at a lower cost

    using what both of you posted a can of 90 cents soup must cost a fraction of a cent to just make market and sell........... I don't think so

    How about the cost of making a phone with a touchscreen? How can they be retailed at $100 or less? Are you trying to say the manufacturing cost of the phones is just a few dollars? Again I do not think so


    Sigh.......

    Really? You know one time you could not get a computer for your home for less than 3,000
    then 2,000
    then 1,500 for a laptop

    now there are laptops for as low as $250, real laptops

    SO thinking "It can't be done" is short sighted and honestly I wonder if you are talking about Ipad? Hmm
  7. Aware's Avatar
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    #7  
    I agree on the 'sunk costs' statement. Previous costs are irrelevant in this new 'project' going forward to build and sell the devices that part still exist for.

    Also, in HP's shoes I'd be considering a second project: a new tablet line with these and other questions top of the agenda.


    - What could actually be built for a selling price of $200?
    - How soon can it be brought to market with minimal R&D costs?
    - How close in functionality can it be to TouchPad?
    - Can any improvements to features/functionality be made to add attraction? e.g Sd card slot
    - What corners can be cut to still leave a desirable tablet at a $200 price point without compromising the good things of the Touchpad?
    - What compromises will 'cheap' tablet buyers be willing to make?
    - how can we flood the market in time for Christmas?


    A work colleague says he would leap at the chance to buy his kid a $100 - $200 tablet for school, and there's not a cat in hell's chance that he would spend $500++ on any tablet for his kid, not even an iPad (he is a ****** at heart)
  8. #8  
    Quote Originally Posted by Aware View Post
    Also, in HP's shoes I'd be considering a second project: a new tablet line with these and other questions top of the agenda.


    - What could actually be built for a selling price of $200?
    - How soon can it be brought to market with minimal R&D costs?
    - How close in functionality can it be to TouchPad?
    - Can any improvements to features/functionality be made to add attraction? e.g Sd card slot
    - What corners can be cut to still leave a desirable tablet at a $200 price point without compromising the good things of the Touchpad?
    - What compromises will 'cheap' tablet buyers be willing to make?
    - how can we flood the market in time for Christmas?
    HP clearly does not want this kind of business model anymore, and this is main reason they amputated PSG as carrier of such business model. They don't want to have 300.000,00 employees and to make XX billions per year. They want 3.000,00 employees, and same amount of billions. I don't blame them for that. I blame them for underdevelopment of webOS, and possible euthanasia of webOS seeking this new business model.
    TheSpike likes this.
  9. Aware's Avatar
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    #9  
    not so fast. HP made the decision to deep six the Tablet before they sold close to a million of them in a weekend. They would be insane not to have a long hard look at what it might mean if they could turn out 'the right' tablet at sub $200.
  10. Crakeur's Avatar
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    #10  
    if HP was forward thinking enough to understand that trying to jump into an apple dominated market was going to be difficult, they'd have understood that they might have to take a hit on the first round of webOS tablets. By doing so, they could flood the market with the best operating system out there, bringing plenty of new users into the market who, once they've tasted the webOS goodness, would likely pony up more for a better device. Look at the ipad. the thing came without a camera but had the slot for the camera in the machine. That means they could have put it there, but didn't. then, a year or so later, they add video that has the crappiest still picture quality around and they sell millions more. when they come out with the 3 and that still camera quality is similar to what we had in the early part of the 2000's, the same fanatics will trade their 2 for the 3 and so on. Apple's brilliant in implementing a system where they sell an almost complete product and then tweak it a bit, making you think the tweak is something insanely new and cutting edge.

    Had HP known that the touchpad would sell out so fast if they were selling it on the cheap, they might have considered selling it for half of what they originally sold it for. They'd have sold plenty, not lost as much and they already have been working on a far better device.

    Instead they abandoned the ship before it even left the harbor.

    Of course, this is HP. They are abandoning their PC arm as well and that accounts for something like 40% of their revenue.. If they don't want to keep a proven money maker, why on earth would they want to go thru the process of turning a hidden gem into a major player.
  11. #11  
    If any of us understood what HP was really thinking, we'd all be millionaires. It's just mind boggling what they are considering. Get rid of the lion share of your revenue because it's not high enough margin, even though it's still profitable? It doesn't make sense. Look for ways to hold on to the revenue while making it higher margin would be a better strategy. I know, easier said than done.
  12. #12  
    All I can say it is that every single person who I've met that picked up a Touchpad, and had an iPad before, likes the Touchpad better!
  13. #13  
    Quote Originally Posted by Aware View Post
    not so fast. HP made the decision to deep six the Tablet before they sold close to a million of them in a weekend. They would be insane not to have a long hard look at what it might mean if they could turn out 'the right' tablet at sub $200.
    Well, HP also sold tens of millions notebooks and computers and thats not stopping them to bail out that market. They don't want small margins anymore.
    They want to be good $200 per unit, not to price it $200.
  14. #14  
    Quote Originally Posted by jbg7474 View Post
    If any of us understood what HP was really thinking, we'd all be millionaires. It's just mind boggling what they are considering. Get rid of the lion share of your revenue because it's not high enough margin, even though it's still profitable? It doesn't make sense. Look for ways to hold on to the revenue while making it higher margin would be a better strategy. I know, easier said than done.
    High Margins normally equate to high risk or volatility. A sensible company would want to underpin this with a strong revenue stream.
  15. #15  
    Quote Originally Posted by jbg7474 View Post
    If any of us understood what HP was really thinking, we'd all be millionaires. It's just mind boggling what they are considering. Get rid of the lion share of your revenue because it's not high enough margin, even though it's still profitable? It doesn't make sense. Look for ways to hold on to the revenue while making it higher margin would be a better strategy. I know, easier said than done.
    I know this one... THEY AREN'T THINKING.

    now where is my $1million?
  16. #16  
    As to the cost of parts for a TP, i have said this before, does anyone really know what HP paid for the part? Think about that, the largest pc maker in the world, buying millions of dollars in parts daily. think about that for a moment. What makes you think 250 is the magic number? We have no idea, none. All we can go on is info from a web search. Sorry, I ran a transport company for almost 23 years. as the fleet grew, my cost per part came down, by a lot. What was 1000 bucks for an alternator, with a fleet of of 75 vehicles, shrank to 400 bucks for the same alternator when i reached 500 vehicles. Sure, the 250 number is a good number, but based on scale of logical production numbers, ie Ipad numbers, that number has to be smaller. The largest pc manufacturer in the world stomps softly and carries a huge baseball bat.
    What it comes down to is this, the market is/ has come to realize what people are willing to pay for a tablet, not above the price of a good laptop, which NO tablet is, I dont care if its a galaxy, ipad, tp or any other damn tablet.
    the argument that they are new and price will come down as they age is false. Tablets in one form or another have been around for a while.
    Again, HP did not pay 250ish per tablet to build ship and so on. It was less, much less. I include the lame a55ed advertising as well.
    Life is short, Play hard, and enjoy every moment as if it was your last.

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