> On Tue, 2008-06-03 at 15:26 -0400, Steve Totaro wrote:
>> On Tue, Jun 3, 2008 at 3:12 PM, Jay R. Ashworth <jra@baylink.com> wrote:
>>> You didn't read what *I wrote*. I'm discussing telephony markups
>>> (40-50%, traditionally) vs PC markups (10%, on a good day, downhill,
>>> with a tailwind).
>> You obviously were off topic since this thread is about the 3com
>> Asterisk Appliance and you never addressed the question that Trixter
>> posed for this product's price.... Do you have an answer?
>
> Yes, why is it 40-50% traditionally? I am really curious, especially
> since you keep refusing to answer and are telling others that their
> answer is wrong.
I would venture that the answer has something to do with the
relationship between cost structures and the externally perceived value,
and the way in which those margins can dissipate when markets "correct"
or "rationalise."
From the very beginnings of the personal microcomputer industry, PC
hardware has been based on largely interchangeable, commodity components
(the efforts of Compaq and Dell and such to make proprietary cases and
memory and so on notwithstanding). Open standards and architectures,
even to the extent they exist in the PC hardware world, create
aggressive competition and downward price pressure as the barriers to
entry are lower. In fact, the manufacturers of the first personal
computers in the early 1980s deliberately structured things this way;
commodity hardware is a complementary good that helps sell more PCs.
You can see how this plays out today, for instance, when a gamer decides
to get a new computer because that would pretty much be required, from a
technical perspective, to make effective use of their brand new
top-of-the-line nVidia card so they can play a new, top-of-the-line
video game that requires a 500 Terahertz GPU and so on.
This puts PC hardware _comparatively_ (and only comparatively so) closer
to the idealised "perfect competition" of certain economic sectors where
the product is fully commoditised and near-perfect market information
exists.
Contrast this with the proprietary, black-box architecture of most
traditional telephone systems and communications gear. The standards
are not open, the components are largely proprietary, and to the extent
that specifications and interoperability exists, it is still
circumscribed to a much more narrow pool of possible intra-industrial
players. In such a situation, what the market will bear can be much
more loosely coupled to the cost structure of the underlying production.
That's why proprietary stuff in general (excluding really, really
generic commodities and other things that are relatively trivial) pretty
much always entails higher margins. The price can float more freely,
far less anchored to the underlying production costs; (1) There is not
a lot of competition to drive it down, and (2) the competition that does
exist is rather an oligopoly, which usually has the consequence of some
degree of collusion to support certain prices and margins, and (3) Even
to the extent that interchangeability of products exists, they are all
mathematically and technically incommensurable to a far greater degree
than commodity goods, as far as the impact of that commensurability on
causing margins to move toward a highly visible, open cost structure
that has vivid external definition to other market participants.
-- Alex
--
Alex Balashov
Evariste Systems
Web : http://www.evaristesys.com/
Tel : (+1) (678) 954-0670
Direct : (+1) (678) 954-0671
Mobile : (+1) (706) 338-8599
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