"Last century?" Kurdt the guy's outlining the flow of money, not the state of chips. It's where the public is spending it's technology dollars, and what that means for the future.
The guy is "last century" tech wise, IPhone,IPad etc are all last centuary
The start of the age of motor cars was in 1950, tech wise very last centuary, but it was at that time there where enuff roads, people where used to to concept of horseless carriages etc
Very good article (except for the tech points
)
Key is the "S" curve graph, who ever start out initially where it starts will make very large profit since they can charge much higher rate.
I interpret his numbers differently.
: Apple makes $3B of profit from its iPhone while HP takes in a mere $500M on its PCs—that’s a 6x difference. The Center of Money has shifted.: Apple makes $3B of profit from its iPhone while HP takes in a mere $500M on its PCs—that’s a 6x difference. The Center of Money has shifted.As an aside a very good book is
http://www.walmarteffectbook.com/ the book attempts to provide a balances view of walmart. It shows both pro and cons of walmart. In a nutshell the secret behind walmart is "velocity" as in how fast they move their products. And their ability to cut costs, walmart only makes like $3 profit per an hour per employee. So literally walmart can not increase wages
HP is kinda like the walmart of computing. When the first HP came out they where a joke. Not saying HP will succeed in small computing market, just saying that when apple is making 50-60% profit on each product that is very dangerous for them
. To paraphrase Bill Gates, you have to price product so competition can not enter, and yet you maximize profit
. Obviously with 50-60% profit with a device, leave lots of room for compeditiors to enter.
A couple of month backs a friend of mine buy a samsung smart phone with wince for 25K, a big difference from 40K. Was it as nice as iphone, no. But in fairness to the device, it had the same memory, had the same basic applications as an iphone, it was unlocked. My biggest bitch was that the on screen keyboard was not as sensitive as iphone's. I was pretty hard to explain to him that i am paying 100% more for a on screen kb, i personally think it is worth the money, he did not. Obviously samsung is only make $100 per device vs apple is making $500
.
HP taking over palm, can they fix palm's production problems and streamline
Another factor that people overlook is the handheld gaming devices. The manufactures of these products have been making small devices for over 10 years. Since the competition in this area is very stiff, thier profit margin is quite small. A gaming device sells for like ~$200. So these guys are lean mean fighting machines
. So it would not be impossible for them to make some sort of smart phone device that sells for $250.
Also another big player is Dell. Dell's profit margins are very small. But like HP and walmart they make up for it in "velocity" (how fast they turn over inventory). I think DELL has a velocity of 40+. Most companies are lucky if they have 5-10. So $$$ are not everything. If a company has a velocity of 5, that means that for every $100 of investment they are selling $500 worth of product. While DELL with a velocity of 50 is selling $5000 worth of product for $100 investment. So the big picture is that DELL can do the same thing with an investment of $100 what another company needs to invest $1K. So DELL is a lean mean fighting machine
.
Anyway good article, food for thought
