dimare@ucla-cs.UUCP (06/05/85)
I just read that Apple's cost of building a Mac is $200. I wonder what the cost is to build an IBM/PC! I find it hard to believe they can do it with so little money. Could somebody provide an explanation? If these are the real numbers, why don't we get cheaper stuff? Can we extrapolate and say that a Sony Trinitron costs $50? Adolfo ///
jmsellens@watmath.UUCP (John M Sellens) (06/10/85)
The question was: why are computers so expensive when it costs so little to manufacture them? Simple: advertising, R & D (hardware and software), risk premium on money invested (, BMW's, Jacuzzi's, ...)
magik@wlcrjs.UUCP (Ben Liberman) (06/11/85)
> I just read that Apple's cost of building a Mac is $200. > Adolfo The $200 figure probably refers to actual cost of parts (and possibly labor since the Mac plant is largely automated). This doesn't include the cost and amortization of buildings, tools and dies, advertizing, plant and equipment maintenance and other expenses that are necessary to such an undertaking (almost forgot design and development costs). I hope this puts things in a more realistic perspective. -- ----------------------------------------- Ben Liberman {ihnp4|ihldt}!wlcrjs!magik
george@mnetor.UUCP (George Hart) (06/11/85)
> I just read that Apple's cost of building a Mac is $200. > I wonder what the cost is to build an IBM/PC! I find it > hard to believe they can do it with so little money. > They are probably buying components in sizeable quantities and they seem to have a reasonable manufacturing process which gives them a good yield. These would contribute to a lower unit cost. > Could somebody provide an explanation? If these are > the real numbers, why don't we get cheaper stuff? > Can we extrapolate and say that a Sony Trinitron > costs $50? > > Adolfo > /// The $200 dollar figure must be cost of parts (maybe including direct labour). It couldn't be taking into account any loaded costs such as advertising, office overhead, R&D, etc. If you don't think that advertising would be a big bill, just think about that issue of Newsweek(I think), the one around U.S. election time where Apple bought *ALL* the advertising. Rumour has it the Jack Tramiel at Atari makes an ST for less than Apple spends on advertising a Mac. Then after costs, there is also the small matter of profit for Apple and its dealers. How big the margin is for Apple will depend on their volume and how elastic they feel the market is. From what I have heard, it is not unusual for an electronics manufacturer to have a 300-400% markup over some measure of unit cost (I'm not sure what cost bases are used). I imagine that IBM is making a smaller margin on the PC but they are(have) sold alot more units (an order of magnitude more?, I'm not sure what Mac sales figures are at these days). As for the Trinitron, its cost is probably pretty low too. Here, I think it is just a case of prestige marketing. For a long time, it was the best set around and the people paid the difference. But I'm not so sure that is true anymore and it will be interesting to see what Sony does. -- Regards, George Hart, Computer X Canada Ltd. {cbosgd, decvax, harpo, ihnp4}!utcs!mnetor!george
savage@ssc-vax.UUCP (Lowell Savage) (06/11/85)
*** REPLACE THIS LINE WITH YOUR MICRO *** > I just read that Apple's cost of building a Mac is $200. > I wonder what the cost is to build an IBM/PC! I find it > hard to believe they can do it with so little money. > > Could somebody provide an explanation? If these are > the real numbers, why don't we get cheaper stuff? > Can we extrapolate and say that a Sony Trinitron > costs $50? > What is probably left out of the calculation is the Engineering cost of designing the composite of components that is the IBM/PC, Macintosh, et al. Counting up the components and their costs doesn't quite cut it. I'm not saying that the profits aren't there (they are probably obscene), but the only way that you can count the REAL cost of making anything is after you stop making it. Then you can add up the cost of materials (including bad parts), what you paid your parts people, engineering, manufacturing (including management), marketing... and divide the total by the number of units produced. That's how much it costs to make one. Then a company needs to have profit enough to cover the units that don't sell.... I doubt that it only costs Apple $200/Mac to build them. There's more than one way to be savage Lowell Savage (The opinions expressed above are obviously those of every sentient entity in the universe--including my left shoe.)
dgary@ecsvax.UUCP (D Gary Grady) (06/12/85)
Far be it from me to run to the defense of Apple, but it's interesting
what an unrealistic picture of business most of us have. Saying that it
costs Apple $200 to make a Mac makes it seem that Apple is really
ripping off the public. But the fact is that this figure probably
doesn't reflect fixed costs (as someone else has pointed out), and those
costs can be considerable. If anyone thinks Apple is really stealing
from people, take a look at their profitability (and layoffs) of late.
A similar misunderstanding has contributed to part of the outrage over
the miliary spending $600 for a toilet seat or an ashtray. Actually, in
some of the cases cited the item was part of a tiny production run. It
costs thousands of dollars to engineer and gear up to manufacture
anything. If you can only sell 20 of them you have to charge a lot for
each one. (One could argue that the designers should have been smart
enough to design things so that an ordinary toilet seat or ashtray would
work. There's a lot to be said for that. On the other hand, I'm not
sure I'd want to be in a plane designed around a toilet seat.)
--
D Gary Grady
Duke U Comp Center, Durham, NC 27706
(919) 684-3695
USENET: {seismo,decvax,ihnp4,akgua,etc.}!mcnc!ecsvax!dgaryindra@utai.UUCP (Indra Laksono) (06/18/85)
D Gary Grady writes : > Far be it from me to run to the defense of Apple, but it's interesting > what an unrealistic picture of business most of us have. Saying that it > costs Apple $200 to make a Mac makes it seem that Apple is really > ripping off the public. But the fact is that this figure probably > doesn't reflect fixed costs (as someone else has pointed out), and those > costs can be considerable. If anyone thinks Apple is really stealing > from people, take a look at their profitability (and layoffs) of late. > -- I suspect the profitability (or lack of) is due to unexpected drop in sales of micro (ok, now give me an mba) in general. It probably cost a lot more in advertising than actual physical costs. So, Apple has elected to go to this orgy(?) of advertising (remember NewsWeek?). Someone has to pay for it, pure and simple. Which brings me to my main point : reading the computer ads from big blue and apple, you'd think that you'd have to have a micro to be human. Possible line : Do you want your child to grow up to be a rock-star? No? Then buy him the newest super-duper quad CPU FRUITCAKE. After all, you don't want to have to listen to 'I Wanna Rock' all the time, do you? What happened to ethics? -Ooops, I swear I won't do it again. ..{allegra cornell decvax ihnp4 linus utzoo}!utcsri!utai!indra